With profits

While with Black Horse Life (1990-98) I helped the Deputy Actuary to derive reversionary and terminal bonuses to recommend to the Appointed Actuary.  I also instructed the fund managers on the appropriate equity backing ratio for the fund.

At Beale Dobie (1998-99) I headed the department responsible for negotiating prices to pay for the with profits policies of consumers that would otherwise have surrendered their policies.

At PwC (2001-06) I combined my knowledge of with profits business and derivative pricing to become one of the pioneers of market consistent valuation.  For a twelve month period I held a with profits practicing certificate.

At the FSA (2010-13) I supported the supervisor of a small insurer whose with profits fund held a large inadmissible strategic asset.  I influenced the firm’s with profits actuary into valuing the asset at a realistic sale price for bonus calculation purposes and (together with the supervisor) helped the CEO of the firm to understand that the asset needed to be sold for the firm to be able to continue to pay out fair maturity values to with profits policyholders.  The situation was eventually resolved to our satisfaction.

While with the FCA (2014-2015) I provided actuarial support to the supervisors (and challenge to the firms) over two exercises to transfer annuities out of with profits funds.  For the transfers to be fair to with profits policyholders, I paid particular attention to:
• The price at which the annuities were to be transferred.
• The impact of the transfer on expected with profits maturity values for the first few years after the transfer.
• The benefit to policyholders maturing further into the future of being invested in a fund with a more appropriate risk profile.

Also with the FCA (2014-2015) I reviewed a number of with profits runoff plans.  I was looking for plans that provided appropriate capital cushions within the with profits funds while avoiding tontine-like effects on maturity values.  I also wanted to see evidence that the plans were resilient to future stresses.