Current CAS Issues and Directions

1. Current CAS Issues and Directions Allan Kaufman Casualty Actuaries of Europe London 20 October 2006

2. Agenda • Results of 2006 Elections – Ballot Initiatives • Basic Education Issues • CAS Centennial Goal / ERM Initiatives • Actuarial Credibility • CAS Publications and Research • Image of the Actuary Campaign • 2006-07 Calendar of Events • Your Input

3. Results of 2006 Elections – Ballot Initiatives Fellows approved the proposed governance initiatives: • Appointed (Non-Actuary) Board MembersCreate a class of Board Members consisting of up to three additional Board Members to be appointed by the Board. • Executive Director as Member of Executive CouncilThe Executive Director should be officially designated as a member of the Executive Council.

4. Results of 2006 Elections – Ballot Initiatives Proposals related to the rights of Associates were not approved: • Right to vote should be granted upon earlier of: Fellowship or five years after admission as a member. • All voting members should be allowed to stand for election to the Board of Directors. • Voting Associates may hold all officer positions, with the exception of: • President • President - Elect • Vice President - Admissions

5. FCAS Education Issues • Task force established in late 2004 to recommend “Learning Objectives” for what it means to be an FCAS. • Considerations • Perhaps reducing total number of exams by one (i.e., 8 exams plus VEE). • Including a mandatory workshop (e.g., DFA Modeling Workshop). • Recommendations delivered to CAS Board in November 2005.

6. FCAS Education Issues • Board Task Force on FCAS Education formed in late 2005 to consider policy-level issues. • TF report was focus of Jan 2006 Board meeting, during which four resolutions were passed: • Prepare a White Paper. • Board endorses use of electives in basic education. • Electives to be available post-Fellowship for CE. • Mastery of core topics must be demonstrated by all candidates through rigorous methods. • White Paper to be exposed in late 2006.

7. CBT Implementation for Exam 2 • September 2005 – First CBT offering of Exam 1(paper/pencil backup for areas without centers). • August 2006 – 98% of candidates take Exam 1 on a computer. • 2006 – Exam 1 offered four times. • Exam 2 is the logical choice to move to CBT. • May 2008 (proposed) – First CBT offering of Exam 2. • 2009 (proposed) – Offer Exam 2 four times via CBT.

8. CAS Centennial Goal The CAS will be globally recognized as the preeminent resource in educating casualty actuaries and conducting research in casualty actuarial science. CAS members will be recognized as the leading experts in the evaluation of hazard risk and the integration of hazard risk with strategic, financial and operational risk.

9. CAS Centennial Goal • Significant, Attainable, Measurable Goals • Interim milestones to help gauge progress towards the Centennial Goal. • 2006 LRPC Goal: Critically review the SAM Goals. • Environmental Scans – Threats: • Competition for Risk Integration & ERM Services • Marketing Actuarial Skills • Volunteerism • Internationalism • Quantification Skills • Reputation of the Actuarial Profession

10. ERM Initiatives • During 2005, the CAS Board took actions to help the actuarial profession benefit from new opportunities in Enterprise Risk Management: • Approved CAS/SOA Risk Management Section. • Launched partnership with Enterprise Risk Management Institute International, Ltd. (ERMII). • Created new Vice President of Risk Integration and ERM position to oversee ERM-related activities. • Formed ERM Task Force to examine the CAS.

11. ERM Initiatives Risk Management Section • Similar to the existing CAS special interest sections CARe and AIR. • Both CAS and SOA members are eligible to serve on the Council that guides the activities of the Section. • Members are encouraged to join the Section. Annual dues are only $20. • Learn more on the CAS Web Site  CAS Special Interest Sections.

12. ERM Initiatives • ERMII is a private, not-for-profit, independent educational and research organization led by CAS Fellow Shaun Wang. • ERMII is co-sponsored by an international group of universities and professional organizations including Georgia State University, University of New South Wales, University of Illinois, Wuhan University (China), and the CAS. • VP-Risk Integration and ERM to oversee and coordinate ERM-related activities.

13. ERM Initiatives • CAS ERM Task Force • Goal: Spotlight the CAS itself as an example of ERM best practices. • Charge: Implement an ERM process for the CAS, report on the outcome of this effort by the September 2006 Board meeting, and prepare an article, authored by the Executive Director and the President, for placement in a magazine such as Associations Now!

14. Task Force on Actuarial Credibility Established to identify, prioritize, and investigate the feasibility of possible strategies for enhancing the perceived credibility of the actuarial profession and to develop action plans for implementation of those strategies considered to have the greatest potential for high impact.

15. Task Force on Actuarial Credibility • Enhance the transparency of the actuary’s conclusions by clearly identifying differences between management’s “best estimate” and the actuary’s “best estimate.” • Enhance the public’s understanding of actuarial estimates. • Improve the transparency of disclosures by requiring that the actuarial report contain an exhibit that summarizes changes in the actuary’s estimates from one period to the next.

16. Task Force on Actuarial Credibility • Enhance the quality of corporate governance by educating audit committees or board of directors or both on the roles and responsibilities of the appointed actuary. • Enhance the self-governance of the profession by requiring the appointed actuary to provide an explanatory document with the ABCD whenever the change in the actuary’s reserve estimates over a defined period exceeds certain predetermined thresholds.. • Elevate the unique role of the appointed actuary within the statutory financial reporting environment by incorporating an Actuarial Statement within the Jurat Page of each company’s Annual Statement.

17. Task Force on Actuarial Credibility • Task Force Report presented to the CAS Board in May 2005. Board accepted the Report and directed the EC to implement recommendations as appropriate. • Two additional Task Forces formed: • Joint Task Force for Enhancing the Reputation of Casualty Actuaries • CAS Task Force for Enhancing the Reputation of Casualty Actuaries

18. CRUSAP • Critical Review of the U.S. Actuarial Profession (CRUSAP) Task Force formed by the AAA. • CRUSAP will identify and analyze risks and opportunities facing the actuarial profession and provide recommendations for meeting emerging challenges. • 30 members serve on the CRUSAP advisory panel. • Fred Kilbourne is chairperson of the CRUSAP Task Force. • See www.crusap.net for more information.

19. Task Force on PublicationsRecommendations • Remove papers from PCAS. Keep CAS-specific content and add Yearbook content. • Create a yearly Membership Directory publication as a separate soft-cover publication. • Create a new journal where refereed papers will be published. The editor is Gary Dean.

20. New CAS Journal The Board approved the name and tagline for the new Journal: Variance: Advancing the Science of Risk

21. Research Working Parties • Research task forces. • Process should result in quality work products. • Brings together the research energy of individual researchers. • Proven to be effective for GIRO, the general insurance research organization of the Faculty and Institute of Actuaries (UK).

22. Research Working Parties 2004-06 • Dynamic Risk Modeling Handbook • Public-Access DFA Model • Bornhuetter-Ferguson - Initial Expected Losses • Tail Factors • Risk Transfer Testing • Data Management and Information Educational Materials • Loss Simulation Model

23. Image of the Actuary Campaign • Profession-wide campaign. • Image Advisory Group, made up of members from each of the North American actuarial organizations, oversees campaign. • www.imageoftheactuary.org/ for more information.

24. 2006-07 Calendar of Events • Seminar on Predictive ModelingOctober 4-5, 2006, Boston • Annual MeetingNovember 12-15, 2006, San Francisco • Ratemaking SeminarMarch 8-9, 2007, Atlanta • ERM SymposiumMarch 28-30, 2007, Chicago • Seminar on ReinsuranceMay 7-8, 2007, Philadelphia • Spring MeetingJune 17-20, 2007, Orlando

25. ASTIN 2007 • CAS is host of the 2007 ASTIN Colloquium - ASTIN’s 50th Anniversary! • Immediately follows the 2007 CAS Spring Meeting, with a joint day of sessions. • http://www.actuaries.org/ASTIN2007/for more information. • Look for brochure in October.

26. Any Further Comments . . . . • Results of 2006 Elections – Ballot Initiatives • Basic Education Issues • CAS Centennial Goal / ERM Initiatives • Actuarial Credibility • CAS Publications and Research • Image of the Actuary Campaign • 2006-07 Calendar of Events • Other Topics • Questions?

27. Allan Kaufman Casualty Actuaries of Europe London 20 October 2006 Thank You!