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Society Of Actuaries
International Experience Study (IES)
April 19, 2007 Mexico City
William Horbatt CoChair of SOA’s IES Working Group
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AGENDA
SOA IES Overview
“ Beware Greeks Bearing Gifts ”
SOA Experience Study “ Tool”
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Origins Of the SOA’s International Experience Study
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HISTORY
2002 – “Brainstorming”
2003 – International Survey (Phase I)
2004 – International Survey (Phase II)
2005 – Country Initiative and IES “Tool” (Phase III)
2006 – Expanding Reach
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PUBLISHED RESULTS
• Publication of Results (updated as data becomes available)
– http://soa.org/professional interests/international/intlinternational experiencestudy.aspx/
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LOCAL COUNTRY INITITATIVE
• Expand to include local companies
• “Empower” local country actuaries
• SOA Confidentiality & Technical Support
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Local Country Initiative
• Local Industry Meetings
– Rio de Janiero – September 2004 – Warsaw – October 2004 – Guatemala – August 2005
• SOA International Section Sponsorship
– Caribbean Actuarial Association 2006
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Local Country Initiative – Why Participate?
Actuarial Incentives Improved Product Pricing
– Mortality – Persistency – Non commission acquisition costs (Agents) – Financial assumptions
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Local Country Initiative – Why Participate?
Accounting Incentives
• International Accounting Standards (IFRS & EEV) – Loss Recognition Testing – Embedded Value Assumptions
• US GAAP – SFAS 60 Era Assumptions – SFAS 97 / 120 Dynamic Assumptions – Loss Recognition Testing
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Local Country Initiative – Why Participate?
Management Incentives
• ROI – Agent Training Allowances
• Competitive Benchmarking – Expected values – Deviations within “normal” range
• Strategic Planning – New market entrance – M&A predue diligence
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Local Country Initiative – Why Participate?
• Regulatory Incentives
– Resource for updating valuation tables
– Resource for understanding variability between companies and over time (solvency management)
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Local Company Initiative – Experience Study “ Tool”
An Incentive to Participate
• Microsoft Access / Excel Program
• Joint SOA / Company Sponsorship – ING, MetLife, New York Life, Prudential
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Experience Study “ Tool”
• Technical Advantages – Consistent exposure formulas – Uniform Excel output
• Practical Advantages – Efficiency – actuaries focus on data and analysis – “Built in” Data validation tools
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Results International Experience Study
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Contributing Companies (parent only)
• AEGON • Aspecta • AIG / ALICO • Bradesco • Brazil Previdenza • Guardian Life • Generali • G&T
• ICATU Hartford • ING • MetLife • NY Life • Occidente • Pru (US) • Winterthur • Zurich
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Work in Process – Company Progress
0
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3
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AR BR Ca CL GT IT MX PL KR TW Country
Contributing Companies
Missing Summary Data Unpublished Detail Published Detail
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In Depth Country Studies
ARGENTINA
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In Depth Country Studies Argentina
• Peso Devaluation
Study Policy Counts Only Studied
– Mortality – Persistency – Agent Retention
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In Depth Country Studies Argentina Mortality Exposure
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
Policies
0 20 25 30 35 40 45 50 55 60
Age
Policies Exposed
Male Female
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In Depth Country Studies Argentina Mortality
A/T Mortality (Ultimate2001 VBT)
0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 140.00% 160.00%
0 20 25 30 35 40 45 50 55 60 65 70
Attained Age
A/T Male
Female
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In Depth Country Studies Argentina Mortality
A/T Mortality (Select 2001 VBT)
0.00% 50.00% 100.00% 150.00% 200.00% 250.00% 300.00% 350.00% 400.00%
0 20 25 30 35 40 45 50 55 60 65 70
Issue Age
A/T Male
Female
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In Depth Country Studies Argentina Persistency
Policy Persistency
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
1 2 3 4 5 6 7 8 9 10
Policy Year
Policy Lapse Rate
Lapse Rate
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In Depth Country Studies Argentina Agent Retention
0% 5% 10% 15% 20% 25% 30% 35%
Attri tion Rate
1 2 3 4 5
Employment Year
Agent Attrition
Attrition Rate
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In Depth Country Studies
POLAND
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In Depth Country Studies Poland
• Studied – Mortality (policy insurance) – Persistency (policy)
• Lines of business – Studied – individual risk/savings – Plan to study –
• individual risk separate from savings • Group life
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In Depth Country Studies Poland Mortality Exposure
0
20,000
40,000
60,000
80,000
100,000
Policies
0 20 25 30 35 40 45 50 55 60 65 70 75 80
Age
Mortality Exposure
Male Female
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In Depth Country Studies Poland Mortality
A/T Mortality (Ultimate 2001 VBT)
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0 20 25 30 35 40 45 50 55 60 65 70 75 80
Attained Age
A/T Male
Female
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In Depth Country Studies Poland Mortality with Selection
A/T Mortality (Select 2001 VBT)
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
0 20 25 30 35 40 45 50 55 60 65 70 75 80
Issue Age
A/T Male
Female
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In Depth Country Studies Poland Persistency
Policy Lapse Rates
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1 2 3 4 5 6 7 8 9 10
Policy Year
Lapse Rates
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IES Microsoft Access / Excel “ Tool”
DEMONSTRATION
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Main Menu
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Selecting Data File to Input
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Mapping Data Fields
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Selecting Data Field Definitions
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Error Messages
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Mapping Field Codes
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Data Validation
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Mortality Report Request
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Mortality Report (Excel)
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Input Data Matrices
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Next Steps International Experience Study
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Next Steps Geographical Expansion
Current Argentina Brazil Caribbean Chile * Guatemala Mexico * Poland So. Korea * Taiwan *
Future? Bolivia China Hong Kong Hungary India Indonesia Peru Philippines Venezuela
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Next Steps Scope Expansion
Current Future?
Mortality Expenses Persistency Agent Retention Agent Productivity
Key Financial Assumptions
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Next Steps
• What it takes in your country?
1. At least 3 interested companies 2. Your management’s support 3. Microsoft Access skills 4. Curiosity!
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Next Steps Contacts
• Ronora Stryker, Research Actuary, SOA – [email protected]
• Bill Horbatt, Chair IESWG – [email protected]
