moderator: presenters: laura alden hanson, asa, … alden hanson, asa, maaa . jeffrey l. johnson,...

Session 31 IF, Activities of the American Academy of Actuaries' Life Practice Council

Moderator:

Donna Christine Megregian, FSA, MAAA

Presenters: Donna R. Claire, FSA, CERA, MAAA Laura Alden Hanson, ASA, MAAA

Jeffrey L. Johnson, FSA, MAAA Leonard Mangini, FSA, FALU, FRM, MAAA Donna Christine Megregian, FSA, MAAA

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ACTIVITIES OF THE LIFE PRACTICE COUNCIL

Donna Megregian, MAAA, FSAJeff Johnson, MAAA, FSADonna Claire, MAAA, FSALaura Hanson, MAAA, ASALeonard Mangini, MAAA, FSA

SOA Life and Annuity Symposium – May 8-9, 2017


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Polling question:Are you a member of the American Academy of Actuaries?

1 2 3 4 5

100%

0% 0%0%0%

1. Yes2. No, but I’m eligible3. No, not sure I am

eligible4. No, and I am not

eligible5. Don’t know


3

Polling question:Are you a member or interested party of any of the work groups under the Academy’s Life Practice Council?

1 2 3

43%

0%

57%1. Yes2. No3. Don’t know


4

The mission of the American Academy of Actuaries is to serve the public and the United States actuarial profession.

Academy Mission Statement


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Volunteers execute the vision and mission of the Academy by providing effective, independent, and objective actuarial information, analysis, and education for the formation of sound public policy.

Executing the Academy’s Mission


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2016 Academy Public Policy Highlights

14 issue briefs , monographs, and policy papers 22 Election guides covering a wide array of policy issues 87 Formal comment letters on policy issues:

28 to federal regulators 49 to state regulators (including the NAIC) 6 to the Actuarial Standards Board 2 to the IAIS 1 to FASB 1 to GASB

Formal presentations on policy issues testified before Congress on long-term care insurance rates

Testified before Congress on health insurance premium increases Policy briefing for Congress members and staff on health issues 7 other policy presentations to a variety of audiences


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Six Practice Councils Vice Presidents: 2-Year Term

Casualty – Rade Musulin Health – Shari Westerfield Life – Jeff Johnson Pension – Bill Hallmark Professionalism – Joeff Williams Risk Management & Fin. Reporting – Jeffrey Schlinsog

Academy Vice Presidents


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Life Practice Council – Jeff Johnson

Life Capital Adequacy Committee – Wayne Stuenkel Life Experience Committee – Mary Bahna-Nolan Life Financial Reporting Committee – Katie Cantor Life Products Committee – Laura Hanson Life Valuation Committee – Alice Fontaine PBR Strategy Subgroup – Cande Olsen Stress Testing Work Group – Linda Lankowski Tax Work Group – Barbara Gold Lifetime Income Risk Joint Task Force – Tonya Manning &

Noel Abkemeier (joint w/ Pension Practice Council)


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Academy Life Practice Council –Capital Adequacy Selected Activity

New Asset Factors Bonds and Real Estate (C1) Review Pricing Risk (C2) Review/Update Interest Rate Risk (C3) Operational/Growth Risk Charge Assessment Longevity Risk Charge Assessment


10

Academy Life Practice Council –Valuation Selected Activity

VA Modernization Life PBR (e.g., aggregation of mortality for purposes

of determining credibility) SVL Interest Rate Modernization Asset Adequacy Analysis Practice Notes


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Academy Life Practice Council –Selected Activity (cont.)

Experience Jointly with SOAPreneed tables on SOA websiteGI tables, report, and definition exposed SI under developmentGI/SI required data collectionAccelerated underwriting2015 VBTMortality improvement factors update

GAAP and Tax Accounting


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Academy Life Practice Council –Selected Activity (cont.)

Strategic Discussions Economic Scenario Generators, potential

federal tax changes PBR Governance Council Liaisons Lifetime income, ASB, public policy

research, group capital, big data


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Donna Claire

Has been a member of various Academy groups for about 25 years Including virtually all of the committees in Life Practice

Council and some committees in the Professionalism Council


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Why Join an Academy Group?

Opportunity to discuss and work on key issues with peers

Opportunity to network Opportunity to make a difference!


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What is the Time Commitment?

Time commitment will vary by individual Can put toe in, perhaps as interested party Start as a member of one or two groups, commit

to one task, or commit to work on a project for one-year

Some committees meet in person around 4 times a year, others meet regularly by phone


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PBR Governance Work Group

Started in December 2015 Was formed to cover PBR issues not covered elsewhere Generally have weekly/monthly meetings Formed subgroups to work on:

Model Governance Practice Note Model Governance Checklist Make comments on the Role of Actuary in Valuation Manual Make Comments of the Modeling ASoP and PBR ASoP Develop PBR Boot Camp


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PBR Boot Camp

Saw a need for training on PBR Developed a 2 ½ day session 22 people served as faculty/speakers in each of the

boot camps First Boot Camp required a lot of preparation and

development of a lot of new material which has helped subsequent Boot Camps with updates

Commitment is on a per Boot Camp basis


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Polling question:Which of the following draft ASOPs have you read?

1 2 3 4

13%

38%38%

13%

1. Setting Assumptions2. Pricing of Life

Insurance and Annuity Products

3. Modeling4. Principle-Based

Reserves


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Life Products Committee – Laura Hanson

Monitor life and annuity product topics Life and Annuity Pricing ASOP Nonforfeiture topics Dying with dignity

Active work groups Annuity Illustration – Linda Rodway Life Settlements Practice Note – Tim DeMars Non-guaranteed Elements – Gabe Schiminovich Life Illustrations – Donna Megregian


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Annuity Illustration Work Group

Chairperson: Linda Rodway Active in development of Annuity Disclosure

Model in 2010-2013 Fixed and fixed indexed illustrations (including MVAs) Buyers guides

New focus in 2017 Participating income annuity illustrations Volatility controlled index illustrations


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Life Settlements Practice Note

Chairperson: Tim DeMars Small team creating new practice note Not directly tied to a particular NAIC working

group or deadline Great volunteer opportunity


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Non-guaranteed Elements Work Group

Chairperson: Gabe Schiminovich Created in response to “buzz” – not directly tied to

a particular NAIC working group or deadline Split into two subgroups

Review regulation and ASOPs to see where non-guaranteed elements guidance may need review

Drafting educational piece on nonguaranteed elements

Monitoring New York’s proposed Regulation 210


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Life Illustrations Work Group

Chairperson: Donna Megregian Evaluating Actuarial Guideline 49 Currently updating practice notes

Actuarial Guideline 49 Changes to ASOP 24

Watching activity around Life Illustrations Model Regulation & Buyer’s Guide

Watching New York’s changes to Regulation 74


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Polling question:To what extent has AG 49 impacted you or your company?

1 2 3 4 5

0% 0%

22%

78%

0%

1. Large Impact2. Medium Impact3. Slight impact4. No impact5. What is AG 49?


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Leonard Mangini

Very active SOA volunteer over the past 15 years (Elected to 4 Section Councils, leading/participated on Research POGs, Exam Grading Committees, and conference planning) and now active with Academy

Member since 2015 of the Life Reserves Work Group

Member since 2016 of the Committee on Professional Responsibility (COPR)


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Life Reserves Work Group (LRWG)

Responsible for developing PBR framework that serves as minimum statutory reserve standard for ALL life products subject to principle-based valuation

Interacts with regulators on NAIC Life Actuarial Task Force (LATF) as they develop sections of PBR Valuation Manual

Recent Activity Revising Company-Wide Exemption (for small companies)

Ongoing Hot Topics Section 7 Aggregation Treatment of Non-Guaranteed Reinsurance Rates


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LRWG Hot Topics

VM-20 Section 7 Aggregation ALM/CFT is viewed at Company Level and permits internal hedging

between different line of business segments – all assets back all reserves

Valuation Manual (Section 7) classifies business into three distinct groups (Term, ULSG, Other) and does NOT permit cash-flow “redundancy” in one group to “cover” any “short-falls” in another

How can these be reconciled and maintain conservative reserves?

Treatment of Non-Guaranteed Reinsurance Rates Mirror reserving is gone under PBR – each party uses own assumptions VM-20 Section 8 – PBR Reserves are net of Reinsurance Who should be holding margins for fact that YRT reinsurance rates are

not fully guaranteed? When should these margins change?


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Committee on Professional Responsibility (COPR)

Part of the Academy’s Council on Professionalism, which spans all practice areas, including life, health, pensions, and P&C

COPR Mission Statement - Promotes knowledge of standards of conduct, qualification, and practice within the profession and suggests ways and means for enforcement, compliance, and monitoring of the effectiveness of these standards

Recent Activity Considerations of Professionalism in International Practice https://www.actuary.org/committees/dynamic/COPR

Current Activity Peer Review Paper


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How to Volunteer with the Academy

Member of the Academy Volunteer interest survey Contact life policy analyst and express interest in a

group

www.actuary.org

http://www.actuary.org/

moderator: presenters: laura alden hanson, asa, … alden hanson, asa, maaa . jeffrey l. johnson,...

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