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Actuaries Sep2011 v9.1

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  • THOMAS M ROSS, Hon FSAI,OBE, BSc FFA FCIA ASAFrom time to time Council elects Honorary Fellows whom it considersproper to admit by reason of their positionor experience or by reason of theireminence in the actuarial profession orotherwise. Following the AGM on 9th June2011, Kevin Murphy, Immediate PastPresident of the Society, conferred TomRoss with Honorary Fellowship of theSociety. Kevin said that the Society wasvery pleased that Tom had acceptedHonorary Fellowship of the Society to joinother eminent Honorary Fellows; ProfessorPhilip Boland, Professor Phelim Boyle,Professor Emmanuel Buffet, Mr ChandKohli, Professor Brendan Walsh andProfessor Alastair Wood. Kevin alsocommented on the Societys loss followingthe recent death of Dr. Garret FitzGerald,who was also an Honorary Fellow of theSociety.

    Most members will know Tom as a PastPresident of the Faculty of Actuaries and as a member of the Societys Committeeon Professional Conduct. Any golfersamongst our membership will appreciatethat it was Tom who presented the Societywith a trophy for our now traditional

    annual golf match against our Scottishcolleagues. There was always a specialrelationship between the Society and theFaculty of Actuaries.

    We asked Tom to briefly outline hisactuarial career for us:

    I am aged 67 and an actuary who hasspecialised in pensions. I graduated fromEdinburgh University with an honours mathsdegree in 1966, and qualified as a Fellow ofthe Faculty of Actuaries in 1970. I wasPresident of the Faculty from 2002 to 2004.

    I retired from Aon Consulting at the end of2005, having spent almost 30 years withthe firm and its predecessors, the best knownof which was Clay & Partners. I spent 5 years in Vancouver, Canada, in the early1970s. I was now reaching the happy stageof life where I had more past than currentappointments and could do things by choicerather than of necessity or at the behest ofothers!

    I am Chairman of an investment trust, theEdinburgh UK Tracker Trust plc, andChairman of the trustee board of the SmithsIndustries Pension Scheme. I remaininvolved with the work of the InternationalActuarial Association, which has theadvantage that meetings have to be

    attended every six months in different partsof the world! I also chair a childrens medicalcharity, the Childrens Liver DiseaseFoundation, which does excellent workin the field described in its name.

    Until recently I was a member of the Boardfor Actuarial Standards, an operating Boardof the Financial Reporting Council, whichwas established to set technical standardsfor actuaries following the review of theprofession chaired by Sir Derek Morris, andthe Senior Independent Director of RoyalLondon. I retired as Chairman of PentaCapital Partners, a Private Equitymanagement company, at the end of 2007.Until June 2008, I was Chairman of thePensions Policy Institute, a research bodywhich I was instrumental in founding, and amember of the Code Committee of theTakeover Panel.

    I was Chairman of the National Associationof Pension Funds from 1995 1997, and amember of the Hampel Committee onCorporate Governance.

    Now semi-retired, I find more time to enjoymy five grandchildren, a round of golf, a dayat the races and lots of travel with my wifeMargaret.

    September Newsletter 2011 1 SAI

    Election of Honorary Fellow Contents:

    Election of Honorary Fellow . . . .Page 1

    Quantitative Easing . . . . . . . . . .Page 2

    Risk Appetite Panel Discussion . . . . . . . . . . . . .Page 3

    Discussion Paper on SovereignExposures . . . . . . . . . . . . . . . .Pages 4,5

    Solvency II Internal Models . . . . .Page 6

    Pillar III under Solvency II . . . . . .Page 7

    Complexities of Risk . . . . . . . . . .Page 8

    Communicating Investment Risk . . . . . . . . . . . . . .Page 9

    Pensions Levy Practicalities &Complexities . . . . . . . . . . . .Pages 10,11

    Societys AGM and Election of2011-2012 Council . . . . . . . . . . .Page 11

    Back Page . . . . . . . . . . . . . . . . . .Page 12

    Sept

    embe

    r 201

    1

    The Society of Actuaries in Ireland

    Kevin Murphy, Immediate Past President of the Society presenting Tom Ross with his Honorary Fellowship parchment.

  • September Newsletter 2011 2 SAI

    On Tuesday 17th May 2011, ColmFitzgerald delivered a presentation onQuantitative Easing and its implications for Actuaries.

    Quantitative Easing (QE) is the monetarypolicy used by central banks to increasethe supply of money. It is achieved when acentral bank credits its own account withmoney that it creates out of nothing. Thismoney is then used to purchase financialassets, government bonds, mortgage-backed securities etc. Additionally, anincrease in money supply through thefractional reserve system can be achievedby changing the reserve requirements.

    The Impact of QEAs QE will typically involve intervention onthe bond market bond prices will go up,lowering yields. However Colm went on toexplain that where the initial interventionleads to higher inflationary expectationsyields at the longer end of the curve maysubsequently rise. Colm then linked theimpact of QE on equities nicely into theimpacts that hed just explained in relationto bonds lower bond yields would makeequities relatively more attractive with thesubsequent high inflationary expectationsalso contributing to higher real assetvalues. QE can result in stock marketbubbles unless the action results in higherreal economic output which wasconsidered unlikely in the longer term.This can then be followed after a periodby a stock market sell-off if investors fearthe implementation of restrictive monetarypolicies to curb excessive inflationaryexpectations. To tackle inflation a centralbank will increase interest rates which thenreverses the initial QE process.

    The impact of QE on the exchange rate is relative to any QE being progressed inother countries. Relative to a countrywhere QE isnt being applied or where it is more restricted QE than in the localcountry the exchange rate should fall.Over the medium term however adepreciated local currency should increasethe competitiveness of the local economyand the export market should grow. In thisinstance if QE results in stronger growththere should be a subsequent appreciationof the currency.

    Companies are encouraged to borrowduring periods of QE as lower interestrates reduce the cost. Capital investmentspending by these companies will go onto increase employment and incomelevels. This will increase economic growth.Increased consumer spending arising from

    reduced debt servicing levels as well as a reduced incentive to save will further impact on economic growth.Internationally however if countriesconduct QE exercises to engage incompetitive devaluations the result wouldbe negative for both international tradeand economic growth.

    At this point Colm summed up his viewsof QE. In the short term you have apositive result in lower bond yields andhigher equity values. In the longer termimbalances and bubbles emerge. Theselonger term negative results of QE and theassociated volatility go on to havesignificant impacts on financial marketsand consequently insurance companiesand pension funds.

    The Irish Money SupplyColm then looked at the money supply inIreland. Here the fractional reservingsystem has gone into reverse and moneyhas been destroyed over this period. Thisis effectively QE in reverse. Ireland iscurrently running a year on yearcontraction in the money supply of about20%. This is worse than was experiencedin the US in the 1930s.

    Economics DiscussionColm went on to stimulate an economicsdiscussion by illustrating some conceptsand theories. Speaking about PoliticalEconomics Colm discussed the age oldquestion of why our political leaders dontfollow through with the economicallycorrect course of action. PoliticalEconomics suggests that the politicianswill play towards the ego of thepopulation the goal being re-election.Tough decisions will only be made whenthey are forced upon the political class.The recent Irish example being theacceptance of the EU/IMF bailout wherethe decision was only made after it hadbeen forced upon the government.

    The next topic that Colm touched on isthe concept of Neoliberalism i.e. theschool of thinking whereby the mostimportant people in society are theentrepreneurial class, those who createjobs and wealth. It goes on to suggest thatsociety should do all that it can to benefitthis class of the population and by doingso the wealth will filter down to everyoneelse. This then motivates theentrepreneurial class to further developand continue to create more money.

    Some startling numbers next as Colmlooked at the negative wealth effect in

    Ireland over the past 3 years. During theyears 1996 to 2007 the money supply inIreland increased by 540%, driving upasset prices but also the fixed debtattaching to these assets. After goingthrough some quick sums Colm arrived atan estimate for the collapse in Irish assetand property values of 700bn or 5 timesGDP.

    Speaking about the Money Tree Colmdescribed how German banks in the yearsprior to the economic collapse made riskfree profits. They did this by sellingGerman bank bonds and then using theproceeds to invest in Greek bonds, forexample, with swaps then being used toclose out the interest rate risk. What thiseffectively achieved was the sale ofinsurance on the status quo in Europe. Asyou know we have seen a change to thestatus quo in Europe, however these banksare not paying out and instead are beingsubsidised by the Greek government inthe case of our example.

    Addressing the issue of a possible bondbubble Colm highlighted the unusualsituation that has emerged in the US.Large volumes of bonds have been sold in the US to combat the financial crisishowever this was simultaneously met witha lowering of interest rates. These twoactions dont generally go hand in handand may result in a bond bubble. We haveseen some signs of this arising out ofvarious actions taken by ratings agenciesover the past few months in relation to USdebt.

    Finishing up the presentation Colmtouched on commodity price movements.Using various indices Colm illustrated the100% rise in the average cost ofcommodities over the last 2 years and alsoa 50% increase in the global cost of food.Colm linked the cost of food to unrest in the middle-eastern states following recentupheavals where people are nowexperiencing food shortages.

    DiscussionThe discussion which followed raised someinteresting points including;

    increasing commodity prices alludingtowards a bubble;

    if cash isnt king what are thealternatives?;

    agency risk;

    celebrity economists;

    and advice for Minister Noonan.

    Mark Lanigan

    Quantitative Easing

  • September Newsletter 2011 3 SAI

    A Working Party of the Societys EnterpriseRisk Management Committee recentlypublished a paper entitled Constructing aRisk Appetite Framework - an Introduction.A discussion evening was held on 24 Maywhich focused on issues raised in thispaper and explored practical challengesthat companies face when putting suchframeworks in place. The panel includedTony Jeffery, Deputy Head, Retail InsuranceDivision at the Central Bank of Ireland(CBI); Pat Ryan, a non-executive directorto several companies; and Bill Hannan,Group Head of Risk and Compliance atIrish Life & Permanent.

    A member of the working party, EamonnPhelan, welcomed and introduced thepanel. He gave a brief introduction to thenew Corporate Governance Code fromthe Central Bank of Ireland and outlinedthe requirement to establish a Boardapproved Risk Appetite.

    The first question put to the panel was inrelation to the type and level of detailrequired in the risk appetite statement.The overall consensus was that this cannotbe vague and thus requires a reasonableamount of detail. It should includefinancial numbers such as economiccapital, regulatory solvency, earnings orsales.

    It was noted that the examples shown inthe Societys working party paper weregood and that the traffic light system,whereby if a risk is outside appetite thestatus turns amber, is effective and givesthe Board a warning sign to act.

    Pat Ryan recommended starting withstrong qualitative statements and thenadding quantitative measures. A riskappetite statement should effectivelyarticulate the business the company isundertaking and where the companywants to use capital. He also warned thatthe risk management framework needs totake into account performance measuresthat are increasing positively, where thisincrease is not in the best interests of thecompany. For example, market shareincreasing for the wrong reasons.

    Tony Jeffery stated that it is vitallyimportant companies choose the level ofdetail included in the risk appetite whichworks for their company, as it may happenthat companies go through the motionsbut a certain risk appetite statement maynot be effective for their company. Also headvised that its best to have an alertsystem that works in real and movingtimes.

    The second question related to whetherrisk appetite measures should beexpressed in economic capital terms. BillHannon responded saying both Solvency Iand Solvency II measures matter.

    A question was raised about the disclosureof risk appetites to the public. Somedocuments will be public under SolvencyII; therefore certain information will haveto be in the public domain. Thisinformation however would need to becomprehensive so the reader canunderstand the detail. The company alsoneeds to decide the extent of the detaildisclosed. One of the CBI requirements isto set risk appetites in the short, mediumand long term. Certain risks behavedifferently over different time horizons. It was stressed that it is important to setrisk appetites appropriately at differenttime horizons, for example, to meet shortterm risks one needs short term capitalsuch as cash. It was also said that riskappetites could be linked to the economye.g. objectives to improve risk measures asthe economy improves.

    A question was presented about theCentral Banks responsibility to ensure thatcompanies are not exposed to peoplefailure as was experienced in the bankingcrisis. It was strongly stated that the Boardof the company is responsible for theindividuals in the firm and that the CentralBank will have views but will not beresponsible for this.

    Tony Jeffery said that under the newCorporate Governance Code there arerequirements for the Board to act as anindependent check even if individuals areperforming well. There should also bestrong risk and audit committees anddirectors should understand the risks. Thethree lines of defence should enforce theseregulations.

    The next question queried how a companydecides if a breach is material enough towarrant reporting to the Central Bank. Thecommon response here was to report abreach only if it is serious and relevant. Itwas suggested that the Central Bank couldprovide more detailed criteria around this.Bill Hannan suggested that the best wayto approach this would be to set uptrigger points such as a red amber greensystem. The risk management frameworkof the company should have procedures inplace to deal with any breaches in anappropriate manner.

    If the recommendation is that a riskappetite has to work for a company onecould have the situation where two similarcompanies have different risk appetites.Tony Jeffery commented that the CentralBank is keen to see how companies runtheir business i.e. what affects policyholdersand what affects shareholders. They wantto know about misses and near misses.

    The following additional queries were alsoput forward:

    How should a company quantify the riskappetite in respect of operational risk?Suggestions included qualitativestatements such as no tolerance forbreach of regulation and also quantitativemeasures, for example the compensationpaid to policyholders or an analysis ofperformance with the Financial ServicesOmbudsman.

    There was willingness for commonlanguage to be used by the Central Bankso that all parties are clear as to what eachterm means e.g. standard definitions forrisk appetite, risk tolerance, riskpreference.

    Will the risk appetite statement effectivelymanage upside and downside risk?One view was that the risk appetite givesboundaries. The risk appetite sets out howmuch a company can put on the tableand how much they can undertake. Therisk appetite statement ensures decisionsare made by the business rather than justactuaries.

    If the Solvency Capital Requirement isbreached, should this be reported?Yes this should be reported and the reasonfor the breach should be communicatedto the Central Bank.

    What extent should the risk appetitesupport Solvency II and help the ORSAprocess? Tony Jeffery stated that SolvencyII is a risk based system and all parts of thesystem should work together. Bill Hannan,who wrote the review, said that SolvencyII will have greater harmony with riskmanagement.

    The last question related to upside risk andthat the risk appetite statement appearedto be geared more towards negative risks.Pat Ryan said that the risk appetite shouldaccount for a range of outcomes.

    Risk Appetite Panel Discussion

  • September Newsletter 2011 4 SAI

    The credit risk of sovereign bonds and theimplications for life assurance actuaries invaluing actuarial liabilities has becomevery topical of late. With this in mind theSociety of Actuaries established theSovereign Exposures Working Party toexamine the various issues involved. On Thursday 9th June members of theworking party presented their discussionpaper on sovereign exposures to a wellattended evening meeting in TheAlexander Hotel.

    The evening meeting followed theSocietys AGM and was opened by thenewly appointed President of the Society,Paul OFaherty, who introduced twospeakers from the working party, Linda Kerrigan and Thomas Farrell.

    Linda began the presentation by outliningthe three main areas covered by the paperproduced by the working party:

    The working party sought to bringsome consistency to how actuarieswould adjust government bond yieldsto allow for credit risk. With this inmind they outlined a number offactors which they felt should beconsidered when making anadjustment for credit risk;

    They summarised a number ofapproaches that could be used toestimate credit risk of sovereign bonds;and

    They identified some issues the actuaryshould consider where a company hasmaterial sovereign exposures (i.e.concentration risk).

    In recent months, government bond yieldsfor several developed peripheral countrieshave been increasing; this reflects themarkets perception of an increase in therisk of default. The valuation of actuarialliabilities requires discounting cashflowsusing a valuation interest rate derivedfrom the yields on the assets backing theliabilities. Historically sovereign bondswere used to back the actuarial liabilities,and movements in asset values due tochanges in interest rates were offset bymovements in the value of the liabilities. If assets and liabilities were well matchedthere should be a minimal effect due tothe change in interest rates.

    In recent months the market values ofsome sovereign assets have fallendramatically due to a widening of spreadson sovereign bonds. The question foractuaries as a result of this are whetherthey should discount their liabilities usingthese higher interest rates, thus causing a

    fall in the actuarial liabilities? And if not,what adjustment should be made to theyields of the assets when valuing theliabilities?

    In order to set future assumptionsactuaries generally analyse historical data.However, there is limited historical dataavailable on sovereign default in developedcountries. Historically, most sovereigndefaults have been concentrated inemerging economies. Hence it is necessaryto develop new methods to assist theactuary in making an informed decisionwhen setting the valuation interest rate.

    Existing Advice for ActuariesLinda then gave an outline of sources ofinformation available to actuaries indetermining the most appropriateadjustment to make to yields to reflectcredit risk:

    The insurance regulations ((EuropeanCommunities (Life Assurance)Framework Regulations, 1994), refer to the need to have regard to theyields available on risk-free investmentsof a similar term in the same currencywhen assessing the adjustment forcredit risk;

    The Central Bank of Ireland (letter toAppointed Actuaries in December2010) advised that it was expectedthat actuaries would explicitlyunderstand changing marketperceptions of risk and, if appropriate,allow for them as described in theabove regulations; and

    Finally, Actuarial Guidance (Section3.3.4 of ASP LA-3) states that it isappropriate to have regard to anydifferences in yield which arise fromdifferences in marketability of the assetin question as compared with the risk-free alternative when assessing thededuction for the default risk.

    The working party concluded fromexamining the regulatory and professionalguidance available that it was clear thatthe actuary is required to assess the creditrisk of bonds (including sovereign bonds)backing the actuarial liabilities.

    Approaches to Estimating Credit RiskA number of alternative approaches toestimating credit risk on sovereign bondswere discussed.

    Credit default swaps (CDS): Credit defaultswaps are a form of insurance which canprotect investors in the event of default.

    They can be viewed as the market price ofthe credit risk for particular bonds. Thisapproach involves basing the illiquiditypremium on the residual spreads availablefrom bond yields less the cost of creditdefault swaps.

    Market based metrics such as Bloomberg:These are metrics quoted on each bondthat are used by market participants whenexamining the credit risk they are takingon in return for holding a particular asset.Two of the most widely used metrics arethe Z Spread (or Zero volatility spread)and the ASW - Asset Swap Spread.

    Solvency II illiquidity premium: Thisapproach is based on a proportion of thespread over EURIBOR-linked swaps of theyield on an index of corporate bonds.Under Solvency II insurers will have to usethis approach regardless of the assets theyhold.

    Historical experience approach: Thisapproach involves using historicalexperience of bond default rates,downgrades and loss on default as a guide to likely outcomes for givenholdings. The approach has been used in the past by insurers holding portfoliosof corporate bonds.

    Bank of England's summarised analysis ofcorporate bond spreads: This approachsuggests a best estimate of circa 50% ofthe excess spread over risk free rates asbeing attributed to an illiquidity premiumfor holding corporate bonds.

    Expert market opinion: This approachinvolves gathering the views of a numberof market experts to derive a consensusestimate of the amount of the spreadwhich relates to risk.

    The working party considered many morepossible approaches, including thecovered bond method and the structuralmodel method.

    Concentration RiskThe discussion then moved on to theconcentration risk associated withsovereign bonds. In particular where acompany has significant concentration risk there is a binary outcome, i.e. there is either default of the sovereign or there is not.

    The actuary is responsible for drawing theBoards attention to any concentrationrisk. The working party recommends thatthe following scenario testing is provided

    Discussion Paper on

  • September Newsletter 2011 5 SAI

    to the Board to highlight the potentialimpact of sovereign exposures on thecapital position of the company:

    Impact on the solvency position of thecompany due to a widening of spreadson government bonds over risk freerates;

    Solvency position of the company if allthe assets were switched to a risk-freeasset (e.g. more highly ratedgovernment bonds); and

    A reverse stress test which would showthe level of loss the company couldwithstand in the event of a default.

    In addition to the above the actuaryshould make the Board aware of theirinterpretation of policyholders reasonableexpectations in the context of sovereignbond concentration risk.

    While it is the responsibility of the Boardto decide whether the concentration ofsovereign bonds is acceptable given its riskappetite and having reflected on the likelyoutcomes, the actuary also hasresponsibilities where they feel there is amaterial risk that a life insurance companywill have insufficient funds or will fail tomeet its obligations.

    SummaryThe working party concluded that it isappropriate to allow for credit risk onsovereign bonds where spreads arematerially in excess of risk-free rates.However, it is difficult to apply establishedtechniques for estimating credit risk tosovereign bonds. It was emphasised thatthere is no single definitive approach toestimating credit risk. The actuary needsto consider a range of possibleapproaches. Finally, the actuary shouldalso make the Board aware of marketexposures and of the implications of creditevents where there are concentratedexposures. This should involve scenariotesting to highlight concentration of risk.

    DiscussionA thought-provoking Q & A sessionfollowed the presentation.

    There was agreement that there was aneed for consistency across theindustry and that sovereign defaultand credit risk were important issuesfor the profession to discuss.

    Some suggested there was a need toformalise the paper into guidance.

    There were also suggestions thatactuaries should start moving towardsthe Solvency II approach now, allowingfor 100% of the credit risk and usingan AAA government bond yield forliabilities.

    Paul OFaherty brought the meeting to aclose and thanked all the speakers for theinformative presentation and discussion.

    Grainne Loughnane

    Sovereign Exposures

  • September Newsletter 2011 6 SAI

    On Tuesday 31 May 2011, Tony Jeffery,Dermot Marron and Niamh Gaudin of theCentral Bank of Ireland delivered apresentation on Solvency II InternalModels to the Society. The large crowdwhich attended was a testament to thecritical role Internal Models will play in thefuture risk management of Irish insurancefirms. Before the presentationcommenced, Tony stated that the viewsexpressed by the three presenters weretheir own personal opinions and were notnecessarily those of the Central Bank.

    Approval ProcessTony opened the presentation by notingthat Ireland has the second highestnumber of applications for use of anInternal Model (unsurprisingly the UK hasthe highest number), with the CentralBank required to assess approximately 45 models.

    The basic principles which the CentralBank Internal Model team will use in theirassessments are:

    European regulators want firms to useInternal Models, but only if theyaccurately represent the risk profile ofthe firm.

    The Central Bank is a risk-basedsupervisor and so proportionality willbe applied where appropriate. Themore material areas of risk will receivethe most attention by the Central Bankteam.

    The role of the Group supervisor is keyand they take prime responsibility forthe approval of the model as a whole.

    Where the Central Bank is not theGroup supervisor, they will beconcentrating their assessment on localuse, local governance and localcalibration.

    The Central Bank will also be particularlyfocussed on the Use Test. Put simply, iflocal management do not understandtheir Internal Model and/or do not use themodel appropriately then the model willnot be approved. To test managementsunderstanding of the Internal Model, theCentral Bank must themselves understandthe model. As part of this familiarisationprocess, the Central Bank willcommunicate any potential issues to theGroup supervisor (but probably not thecompany). These issues will be gradedinto three classes:

    Observation - an aspect of the modelthat may be deemed to be unusual butdoes not overly worry the CentralBank.

    Concern - an aspect of the modelwhere the Central Bank will requirefurther evidence as to itsappropriateness.

    Major Issue - an aspect of the modelthat the Central Bank is not preparedto accept.

    The approval process that the CentralBank will follow is:

    1. Readiness Assessment Request

    2. Assessment of Readiness by the Central Bank

    3. Request for Status of Evidence and Pre-Application Submission

    4. Walkthrough of the Internal Modelwith the Central Bank

    5. Decision on assessment levels(conceptual, detailed or very detailed)

    6. Completion of Model Overview andWork Plan (MOWP)

    7. Detailed work based on MOWP

    8. Approval and confirmation of nofurther questions (NFQ) for eachcriteria

    9. Formal Submission and Approval (theCentral Banks legal interpretation isthat they cannot formally approve anInternal Model until after 1 January2013)

    ValidationFollowing Tony, Dermot Marron spoke tous on the validation of Internal Models.Dermot felt that firms need to give theinitial validation of their Internal Model a higher priority than may currently be the case when planning their modeldevelopment. If the initial validation doesnot take place early in the developmentcycle of the model it may be too late toremedy any problems with the theoreticalbasis of the model that may be uncoveredat a later stage.

    Ongoing validation of the Internal Modelis also of particular importance to ensurethat the model stays fit for purpose andremains aligned to any changes in the riskprofile of the firm.

    Solvency II requires that the validation ofthe model is carried out independently ofthose who developed the model. Thereporting lines of those validating themodel are very important whenevidencing this independence - a directline to those who can approve modelchanges is very desirable in this regard.Dermot also explained that validationwhich is carried out by an external firm is not automatically deemed to beindependent, for example where the firmhas previously advised on the model or isconflicted in another way. If validation is

    being outsourced then the terms ofengagement should match the firmsvalidation policy. Dermot suggested thatfirms who intend to outsource theirvalidation should share their proposedengagement document with the CentralBank to enable them to offer an opinionon whether the terms meet theirexpectations.

    AggregationOur next speaker was Niamh Gaudin, whogave an excellent synopsis of the issuesregarding the aggregation methods usedin Internal Models. As diversificationbenefits can amount to up to 50% of afirms undiversified total economic capital,this is an area that the Central Bank will beexamining in detail.

    A particular difficulty for actuaries in thisarea is the requirement to justify theassumptions underlying diversificationeffects with empirical data. It is quiteapparent that there is very little empiricalevidence available so expert judgementwill be heavily relied upon here.

    The most common aggregation methodsused by Irish companies are variance-covariance matrices and copulas. Whenchoosing their aggregation method, firmsshould consider:

    how accurately are CAT eventsrepresented?

    how easy will meeting the StatisticalQuality Standards be?

    Use Test - will senior management beable to demonstrate an understandingof the method?

    DiscussionAt this point the presentation ended andwas followed by the customary Q&Asession. Some of the more importantpoints discussed were:

    Insurance is a mathematical businessand as such it is not too much toexpect boards and senior managementto understand mathematical conceptssuch as the aggregation methods usedin their Internal Model, e.g. variance-covariance matrices, copulas.

    Although Internal Models will not beaccepted or rejected on the basis ofhow they compare to the StandardFormula, firms are expected to be ableto understand and explain why theirInternal Model produces a differentcapital requirement.

    Dnal Hyde

    Solvency II Internal Models

  • On Wednesday 22nd June 2011, a largeaudience attended a presentation by BrianMorrissey on Pillar III of Solvency II. Brian is a consultant with KPMG and actsas Appointed Actuary to a number ofregulated entities. This presentation isnumber nine in the Solvency II serieswhich has been running since the end of2009. Most of the focus of the Solvency IIpresentations to date has been on Pillar Iand II. In this presentation Brian focusedon the Pillar III reporting and disclosurerequirements under Solvency II and thechallenges facing companies as theimplementation date nears. Brian openedby explaining that the aim of Pillar III is to enhance market discipline andcomplement requirements under Pillars Iand II to make undertakings moretransparent.

    Information AvailableBrian explained that there is a lot ofpublically available information including:the Directive Level 1 text, Omnibus II,CEIOPS/EIOPA final advice and there isalso private information which if you arenot part of a large insurance Group maybe difficult to attain. Brian discussed theinformation in relation to Pillar III that isavailable publically from the varioussources listed above.

    Reporting FrameworkBrian described the components of thePillar III reporting framework whichincludes the Solvency and FinancialCondition Report (SFCR) and the RegularSupervisory Report (RSR). The SFCR will be publicly disclosed while the RSR is aprivate document which will go to theregulator and will contain all informationnecessary for the purposes of supervision.On an ongoing basis there is reporting tothe supervisor in the event of pre-definedevents and other ad-hoc queries from theregulator as they arise. There may besome initial requirements to provide theregulator with an opening Solvency IIbalance sheet and SFCR and the firstSupervisory Report but none of this hasbeen finalised yet. Brian explained thatSolvency II is a principles based Directiveand that the detail of the reporting in theSFCR and RSR should be proportional tothe complexity of the risk profile of theinsurer. Brian emphasised that for internalmodel companies there are substantialadditional disclosures including: use test,calibration, statistical quality, P&Lattribution, validation standards andexternal data.

    SFCRThe SFCR is produced annually. There isscope for a single Group wide SFCR to beproduced, however, permission isrequired. The format of the report isspecified and the SFCR is a Boardapproved document. Brian explained thatthe SFCR is aimed at policy holders andother stakeholders so it needs to beunderstandable. Brian discussed thestructure of the SFCR in detail whichincludes: business performance, externalenvironment, systems of governance, riskprofile, valuation for solvency purposesand capital management. Brianhighlighted that while this is a publicdocument a lot of information is stillrequired and pulling all this together in anefficient way will be a challenge.

    RSRWhile there is scope to produce a Groupwide SFCR, companies do need toproduce a solo RSR. This is not necessarilyan annual document and it is possible toget an exemption to produce one everythree years. However, the frequency willdepend on the intensity of the supervisoryreview process. The RSR will have acommon structure and it is also a Boardapproved document. The RSR willcomplement the SFCR and there will beno need to duplicate informationcontained in the SFCR. Brian explainedthat the structure of the RSR is similar tothe SFCR but the information required ismore detailed as it is focused at thesupervisor. There will be extra informationthat would not go into the SFCR forexample: business strategy, risk strategy,legal issues, regulatory issues, variance tobusiness plan, future developments for thecompany and disclosures aroundmechanics of the internal model relative tothe standard formula. As part of the RSRthere will also be significant emphasis ontransactions and risk concentrations withina Group and inter-Group transactions willbe an important part of reporting to thesupervisor.

    Brian used an internal audit as an exampleto illustrate the differences between theSFCR and the RSR. The RSR would includedetails of the internal audit workperformed, the findings of such work, theresolutions and implementation plans.The SFCR is less detailed and wouldcontain information such as how internalaudit is set up within the company andhow it is independent and objective ofmanagement.

    QRTsThe QRTs (Quantitative ReportingTemplates) support the SFCR and the RSR.The QRTs will consist of quantitativeinformation in a standardised formatwhich can be easily compared across theindustry. This will ensure consistentreporting and should aid harmonisationon a European cross-border basis. All ofthe templates will go into the RSR whileonly a handful will be issued publically inthe SFCR. There are more forms to becompleted than current requirements.Brian discussed some of the informationrequired to complete forms. Brian notedthat there is still a lot of discussion anddebate around the variation analysis. At the moment the industry bodies areputting forward an EEV type approach;however, EIOPA are not in agreement.

    Reporting TimelinesBrian went through the reportingtimelines for solo companies and Groupsand he explained that there will be atransitional period. By 2016 the reportingtimelines will be shorter than the currenttimelines under Solvency I. Brian explainedthat subsidiaries of Groups have longer tosubmit numbers, but he explained thatthis would have to be in line with a Grouptimetable which will be tighter than theactual timeline and he expects that thiswill drive how subsidiaries based in Irelandproduce the information. Brian stressedthat the reporting calendar will becomemore crowded and complex than it is atthe moment and this will place significantdemands on reporting functions, evenbased on current workload without thenew requirements.

    ChallengesBrian wrapped up his presentation byexploring some of the challenges facingcompanies as the implementation datenears. Brian concluded that even thoughthe requirements are not finalised, there isenough information to start to understandthe challenges and start developing draftsand, although Pillar III may be theforgotten Pillar, it should not be dismissed.

    Q&A SessionThis was followed by a Q&A session whichincluded discussion of: resource challengesfor supervisors, challenges for directors,frequency of the RSR and how effectiveSolvency II would have been to preventpast failures.

    Jean Rea

    September Newsletter 2011 7 SAI

    Pillar III under Solvency II

  • September Newsletter 2011 8 SAI

    Neil Cantle, a principal with Milliman inthe UK, addressed the Society on 27 Juneat an afternoon meeting at the AlexanderHotel on the topic of Complexities ofRisk. The presentation gave an outline ofa new model developed in Enterprise RiskManagement (ERM) and how this couldbe applied in practice. Neil had beenworking closely with the ActuarialProfession in the UK in recent years todevelop practical methodologies forassessing and managing risk for all typesof businesses.

    Neil started off by questioning thestereotypical view of risk and how it ismeasured. Risk was, he said, an emergentproperty of a complex adaptive system,such as any large business. Humanjudgment can be one of the worst ways to measure risk, and more often than notleads to significant errors. In particular, theidea that many risks were too complex tomodel was incorrect, and we needed toaddress complexity in any risk model.

    He highlighted that even complex systemstended to be the result of underlyingsimple processes for example, hundredsof birds flocking through the air in unisonmay appear to be complex, but this isactually the result of each bird following asmall number of basic principles.

    Any system needs to first of all take aholistic approach , i.e. look at the overallpicture and then assess what precise risksneed to be quantified. The most important,and most difficult, part of this was to allowfor interaction between risks most riskscannot be measured in isolation. To allowfor this, a system was developed that uses Cognitive Mapping to capturethe connections between risks and setthem out in a clearly visible manner.

    The first step is to understand your riskprofile. This will differ for each organisation,and can evolve over time. This should giveyou a set of risk factors. At this point it iscritical that you dont oversimplify toosoon labelling a risk into just one areacould result in a failure to allow forcorrelations between the different risks.

    Visually mapping out the risks allows youto appreciate the key nodes or issuesthat are showing up as risks. There will beseveral links between the nodesrepresenting the correlations between therisks. The key drivers for these nodesshould then be identified to see what isdriving these risks, and hence what thebusiness should be most concerned with.A further item to review is any gaps in the

    model the map should show if any itemshave been omitted, as is often the case.

    The Cognitive Mapping method also hasthe benefit of allowing you to measurehow much information (or uncertainty)you have, and the Shannon Entropy canbe used for this purpose.

    Neil gave the example of the reportedfinancial results of 2 large UK insurers. The companies had very similar headlineresults in terms of premiums, claims etc.but when underlying factors wereexamined, it was found that the twocompanies had very different drivers and hence very different risks.

    The discussion then moved on to theactual output from the model. It could beused from a top-down or bottom-upperspective. From the top-down, abusiness can set its risk appetite (probablyto be set by the board of directors) e.g.,deterioration of balance sheet position toa certain confidence level. This can thenbe input to the model to feed down andgive you limits for each node or riskfactor. Alternatively, it could be used fromthe bottom-up as a risk-monitoring tool inorder to assess how much risk thecompany has at a particular point in time.

    Neil showed a number of slides on howthe output would look in the form of a tree with the different branchesrepresenting different risks. The closer thebranches, the more alike the risks were.This was used to demonstrate how therisks for one multinational could be pooledfrom the information provided by thevarious operating entities with some risksshowing up as significant to the companyoverall even though they were notsignificant to any of the individual entities.

    DiscussionNeil then summarised his presentationbefore throwing it open to questions.Mike Claffey asked how the idea of reversestress-tests had been applied in the UK.Neil replied saying that the FSA wouldwelcome this, as it wanted to see anassessment of all the risks that may cause abusiness to fail, not just the risk-capitaltests that had dominated to date.Cognitive Mapping could identify risksthat had not been accounted forpreviously.

    William Holmes pointed out that thisshould be seen as an opportunity for theActuarial Profession. It should be marketedas an opportunity for business leaders to

    better manage their business and increaseprofitability, rather than an extraregulatory burden. William also asked ifthe methodology had been applied to theinvestment world; Neil confirmed that ithad been used on several occasions andthe feedback had been that the modelallowed businesses of all types tounderstand and identify risks that had notbeen recognised before.

    In response to a question from JamesMurphy, Neil stated that the developmentof these models had in the past oftenbeen left to company management beforean eventual presentation to the board ofdirectors. In fact, the reverse waspreferable, as the board should beinvolved at the outset in setting the riskappetite for the company and the modelcould then work from there.

    Following a question from DermotGorman, Neil confirmed that someinsurers intended to use the model in theirinternal model under Solvency II,especially for operational risk. He did say,however, that most companies weretaking a bottom-up approach underSolvency II and looking at each individualrisk and quantifying it rather than themore holistic approach proposed by Neil.

    Chairperson Padraic OMalley asked if themodel could identify risks in advance. Neilsaid it could, and gave the example of thebanking collapse of 2008, where themodel would have identified specificquestions relating to banks thatsubsequently collapsed, but not for those that survived intact.

    There being no further questions, PadraicOMalley thanked Neil for his informativeand interesting presentation.

    Gerard Nolan

    Complexities of Risk

  • On Tuesday 28th June, the Working Partyon Communicating Investment Riskpresented their Report on this topic. TheWorking Party is chaired by Colin Murray,who was assisted in the presentation byMaria McLaughlin and Hendri Solomon.Emily OGara and Marie Phelan are alsomembers of the Party.

    The Report tackles the increasing problemof how best to communicate investmentrisk to consumers who may not beparticularly financially literate. As therange and complexity of funds both in Life Assurance and in the Pensions industryare increasing rapidly, the industry needsan effective way to make sure investorsunderstand the risks they are taking on.

    The Report which the Party presented isnot intended to set out guidelines or beinterpreted as the most effective way tocommunicate investment risk. Instead theParty aimed to educate on different global requirements when portrayinginvestment risk on investment products.The effectiveness or otherwise of theseregimes was also analysed. The Report didoffer some pointers on the construction offund literature, but these were intended tostimulate debate and were not presentedas a solution to the difficult problem ofensuring investors are fully aware of whattheyre getting into.

    Current RegimesAfter brief introductions, Hendri Solomondiscussed the current methods forpresenting the risk inherent in investmentproducts worldwide. Ireland has noparticular guidelines for describing risk and risk calculation varies betweenproviders. At the other end of the scale,Italy requires a rigorous set of disclosurebased on three pillars of decision making:what happens to your investment underdifferent return scenarios, risk classificationand time horizons. While such detail iscomprehensive, the Party are less keen onthe intensive calculations required and theeffort required to ensure consumersunderstand each output.

    Other regimes, split between those whichdescribe risks and those which provide arisk rating or classification, were alsodiscussed.

    European DevelopmentsMaria McLaughlin then spoke aboutEuropean developments, particularly theUCITS IV Directive and CESR Guidance.Maria outlined the main features of theKey Investor Document (KID), a templatefor investment product literature.

    The main requirements are:

    A two page document with a clear,easy to understand statement ofobjectives and investment policy

    A risk and reward profile, including ahorizontal risk thermometer with a riskrating determined by theweekly/monthly volatility using five ormore years of data. The risk ratingshould include a short narrative

    Information about charges (inmonetary terms)

    Past performance (in monetary terms)

    Practical information

    While the Party supports a shortdocument which includes graphics anduses volatility as a measure of risk, they feltthat there are a number of problems withthis template, such as a potentiallyunbalanced emphasis on past performance,no quantification of other risks (e.g.concentration or liquidity) and noallowance or mention of diversificationbenefits if an investor has holdings inmore than one fund.

    The European Commissions PRIPs(Packaged Retail Investment Products)initiative, ABI and InvestmentManagement Association research and the Consumer Protection Code were alsodiscussed.

    Risk MeasuresColin Murray finished off the presentation.He discussed the effectiveness of differentmeasures of risk such as volatility,Sharpe/Sortino ratios, drawdown, 99%Value at Risk, etc. Using a large range oflife assurance fund data, the Party appliedeach of these risk measures to various fiveyear periods and examined how wellhistoric risk predicted future risk. The Partyconcluded that while there are manydifferent and complex risk measures,volatility is as effective as, or better than,other measures in summarising theriskiness of an investment.

    Colin ran through a proposed investmentliterature template which the Party hadconstructed. This largely followed thelayout of the KID discussed earlier and hadthe following features:

    Two pages no more so as not tooverwhelm consumers

    Product names should have a subtitlewhich summarise the risk features ofthe product (e.g. A high risk fundwith the potential for high returns)

    All management and intermediarycharges should be shown

    Percentages (for example charges orexpected returns) are accompanied bynumerical examples (as SAI PresidentPaul OFaherty noted, 30% of peopledont understand percentages)

    Risk levels should be shown on ahorizontal thermometer and explainedby a short narrative

    A stochastic analysis of potentialreturns and the benefit of these returnsto investors (tables could be used toreduce required calculations for manystandard funds)

    DiscussionFollowing the presentation, the flooropened up to comments and questions.Many in the audience commented on thehigh quality of the paper, including formerSAI President, Philip Shier, who noted howuseful this research would be in the DCPensions industry.

    Niall Alexander

    Communicating Investment Risk

    September Newsletter 2011 9 SAI

  • September Newsletter 2011 10 SAI

    Frank Downey delivered an informativepresentation to a joint meeting of theSociety and the Association of PensionLawyers in Ireland on the controversialpensions levy in the Alexander Hotel on 19 July 2011. The fact that thepresentation was so well attended for amid July event and was followed by anextensive Q&A session is a testament tothe importance of the subject.

    Weve only ourselves to blame!Frank opened with some interestingremarks from the Dil records when thelevy was being debated. The Minister forFinance had explained that the levy wasactually proposed by the pensions industryitself, and in his discussions with theindustry the point was made that basedon actuarial advice, a temporary levywould have no impact on funds. The levy is apparently affordable becausefunds are expected to grow by an averageof 6% in the next three or four years(!)Interestingly, the logic for excludingannuities and ARFs from the levy isbecause they are already subject toincome tax on payment or (imputed)drawdown. The future tax payable onfunded pension arrangements seemed tobe conveniently ignored in that argument.

    Should the employer pay? Moving on to the area of where themoney should come from, Frankconsidered that given the trusteesobligation to act in the best interests ofthe beneficiaries, they should first ask theemployer if it would pay the levy from itsown resources. The outcome of this islikely to vary depending on theinteractions of the trust deed & rules,corporate policy and the financial positionof the employer. This may touch on somecomplex issues in the trust deed & rules interms of contribution obligations andwhether the employer could be forced topay. The area is likely to require some legaladvice, for example, on whether the levycould be regarded as an expense of thescheme rather than a contribution. HR issues are likely to emerge if theemployer decides to pay it for one class ofbeneficiary but not another e.g. payingfor DB members but not DC members; orpaying for active members but notdeferreds.

    Reduction in benefitsIf the levy is not paid by the employerfrom its own resources, then the Actallows for benefits to be reduced to coverthe impact of the levy as follows:

    the benefits payablemay be adjustedby the trustees, but the diminution in valueof those benefits shall not exceed theamount disbursed from the assetsattributable at the valuation date to theschemes liabilities in respect of thatmember

    Firstly, a benefit reduction is notautomatic, and some possible justificationsfor not reducing the benefits where theemployer does not pay include:

    the scheme is in surplus;

    the scheme is not in surplus, but thefunding proposal remains on track;

    the levy could be offset by investmentor other gains which are morematerial;

    discretionary benefits could be reducedor not given.

    However, the possibility of reducingbenefits raises a number of important anddifficult decisions. Again, what powers thetrustees have to effect changes may bedictated by the trust deed & rules.

    Frank then ran through a number ofscenarios demonstrating how the financialposition of a scheme might changedepending on how the levy was dealtwith.

    In the scenario where a scheme is in deficit and benefits are not reduced, thenbecause of the priority for expenses andpensioners, it is active and deferredmembers who will suffer a reduction incoverage. Due to the gearing effect, thereduction in assets attributable to themwill be greater than simply 0.6% and this can become quite significant after 4 (or more) years.

    If the decision is taken to reduce benefits,then questions emerge as to what assetscan be attributable to liabilities in respectof a member, and on what basis shouldthose liabilities be calculated? Frankconsidered two possible approaches:

    a) Based on the ongoing funding levelwith the same level of reductionapplied to all members.

    b) Based on the MFS funding level andeither

    (i) same reduction for all members, or(ii) reduction based on coverage level

    for each class of member.

    Running through some examples, it wasclear that there is a great deal of variabilityin outcomes for different categories ofmember depending on which approachwas chosen. Again, the effect can besignificant if compounded over 4 years.The different alternatives should bepresented to the trustees, and they canconsider who should bear the greater lossdepending on the nature of their scheme.

    Practicalities and other issuesFrank considered a number of other issueswhich emerge if benefit reductions are tobe implemented:

    The Revenue may review anyadjustment of benefit.

    Do schemes need a full valuation ofliabilities at 30 June to calculatereduction accurately?

    Will the booklet / trust deed & rulesneed to be updated?

    How should communication tomembers take place?

    Should current pensions be reduced orcan it be deferred until the nextincrease?

    Should deferred benefits be reduced orcan an adjustment be made to futurerevaluation?

    Can actives accrue 0.994 yrs benefitper year (instead of 1 year)?

    New admin requirements for benefitstatements.

    Accounting for the levyThe initial consensus of the Big Fouraccounting firms is to account for the levy(and any benefit changes) on a year byyear basis, rather than all in one go. For2011, either the actual return on assets orthe expected return on assets should beadjusted downwards to reflect the levy,but for 2012, the expected return shouldbe adjusted downwards. If benefitreductions are to be implemented, thenthese should be accounted for as a pastservice gain in the year in which thedecision to reduce benefits is made.

    Pensions Levy -

  • Q&AA healthy Questions & Answers sessionfollowed where members raised theirthoughts and interpretations of thelegislation as well as some of theclarifications that they have obtained fromRevenue to date.

    Some of the key points raised were:

    Whether net current assets due to thescheme at 30 June are subject to thelevy? The Revenue are to provideclarification on this point.

    Whether annuities held by the scheme(in trustees name or individualmembers name) would be consideredan asset for levy purposes? Apparentlythe Revenue have clarified that thesecan be ignored for levy purposes asthe deemed net value is zero.

    It was noted that if employers tendedto pay the levy for their DB schemes(which generally have olderemployees) but not for their DCschemes (which generally haveyounger employees) then this mightpose some discrimination problems.

    It was acknowledged that there are anumber of conceivable ways ofimplementing benefit reductions andone speaker suggested that it might beuseful for the pensions industry tocome together and agree a consistentmethod. Keith Burns indicated thatthe Pensions Committees preferencewas for actuaries (and other advisors)to outline a range of possibleoutcomes to trustees rather than pickone single approach.

    It was acknowledged that the wordingin the Act was vague and inconclusive,and it would be helpful if the Revenueissued guidance clarifying what wasintended by the legislation.

    A question arose as to whether theterm member includes dependantpensioners or those in receipt of abenefit under a pension adjustmentorder? This will depend on whetherthey have been admitted tomembership under the rules of thescheme.

    On whether the temporary levy waslikely to continue beyond the 4 years,Frank felt that it will be continued insome form. The point was made thatthe pensioner lobby is very effectiveand powerful and if the levy waspassed on to them in the form ofbenefit reductions, then they might beincentivised to mobilise and putpressure on their electedrepresentatives to ensure it does notcontinue longer than necessary.

    Conor King

    September Newsletter 2011 11 SAI

    Practicalities & Complexities

    Prior to the conferring of Honorary Fellowship on Tom Ross, the AGM of the Societytook place. Paul OFaherty was elected as the Societys 20th President at the AGM heldon 9th June 2011. Paul will deliver his Presidents Address on Thursday 22nd Septemberin the Alexander Hotel. This will be an ideal opportunity to hear Pauls views and hisplans for his term as President.

    Council 2011-2012 Officers: Paul OFaherty PresidentDermot Corry Vice President

    Evelyn Ryder Honorary Secretary

    Jim Murphy Treasurer

    Immediate Past President: Kevin Murphy

    Council Members: John Armstrong Jonathan GooldGerard Bradley Colm Guiry

    Joyce Brennan Sinead Kiernan

    Keith Burns Richard OSullivan

    David Costello Ciara Regan

    Cathal Fleming

    Societys AGM and Election of the 2011-2012 Council

  • September Newsletter 2011 12 SAI

    On the MoveFellows:Michael Brennan has moved from Friends First to Canada LifeSteve Gardner has moved from Barclays to Santander Insurance IrelandBrian OConnor has moved from Aviva to MetLife Europe Bernard Lee has moved from Barclays to MetLife EuropeNaomi Reville has moved from Aviva to DeloitteMichael Murphy has moved from Aviva to Towers Watson.

    Students:John McGlynn has moved from Mercer to DeloitteNiamh Sweeney has moved from Capita to PricewaterhouseCoopersUrsula Morrow has moved from Towers Watson to PricewaterhouseCoopersKate Kingston has moved from AEGON to AXA Life EuropeMorgan Gleeson has moved from Aviva to MetLife Europe

    Society of Actuaries in Ireland102 Pembroke Road, Dublin 4. Telephone: +353 1 660 3064 Fax: +353 1 660 3074 E-mail: [email protected] Web site: www.actuaries.ie

    Azka Ali Mercer

    Tanya Beattie Mercer

    Daragh Burns Irish Life & Permanent

    Sinead Carty Aviva

    Thomas Donegan Bank of Ireland Life

    Cora Ciechanowicz Zurich

    Keith Gawley Allianz

    Christopher Goold Aviva

    Ciarain Kelly Milliman

    Gavin Maguire Irish Life AssuranceMajella McDonnell Aviva

    John Nugent Bank of Ireland Life.

    Maebh OConnor Mercer

    David OShea Bank of Ireland Life

    Laura Power AON Hewitt

    Sinead Robertson Aviva Life & Pensions

    Theresa Shiels Irish Life

    Keith Sutherland Standard Life

    Left to Right: Aisling Bhreathnach being presented with her prize by JenniferJohnston from Acumen Resources

    Congratulations to our Recent Qualifiers:

    Student Societys Summer BBQOn Thursday 21st July, the Student Societys Summer BBQtook place in the outdoor courtyard at D2, Harcourt St.

    Although the Irish weather did not hold up its end of thebargain, students spirits were not dampened as they weresafely under cover from the rain. The event was very wellattended, with over 125 students turning out, and apleasant evening was enjoyed by all.

    The menu featured some tasty BBQ food, somerefreshments and the chance to win an Apple iPad2. Ofall the spicy actuarial debate overheard, most focused onwho should win the coveted iPad. Many felt it wouldsurely be theirs to claim. Much bribery was attempted(and of course rejected). In the end, the prize went to Aisling Bhreathnach.Congratulations to her on her terrific windfall.

    This year Recently Qualified actuaries were also invitedand we were happy to see that many attended. The eventwas kindly sponsored by Acumen Resources and theStudent Society would like to thank them for theirsupport.

    The Charity Table Quiz took place on Thursday 18thAugust and winners and photos will be in the next issue ofthe Newsletter.