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The Actuary The magazine of the Institute & Faculty of Actuaries
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Careers: Pastures new

Alvar Chambers,
LDI portfolio manager,
Insight Investment

How did you come to be working in this sector?
I had been a consulting actuary for 12 years, in pensions and investment consulting. I thought it might be interesting to try a more ‘hands on’ investment role. Looking at the issues faced by defined-benefit pension schemes at the time, it was clear that there was a need for schemes to align their investment strategies more closely with their increasingly mature liability profiles, and this created an opportunity for investment management firms to build a business out of liability driven investment (LDI). I also felt this was the perfect opportunity to take my existing actuarial skill-set and apply it to the world of portfolio management.

What are the main opportunities/challenges?
LDI is a relatively new and rapidly evolving area that is throwing out new and varied challenges all the time. Keeping on top of a changing market environment is crucial — for example, the last year has seen us managing client positions through a major derivatives counterparty default when Lehman Brothers went into administration.

How has your actuarial background helped you?
I brought to the team an understanding of how the dynamics of pension liabilities work, which helped us to design solutions that meet pension funds’ needs. A key element of taking on new client mandates is liaising with actuaries at pension funds and their consultants, so they can provide the data to construct the liability benchmark.

How do you see the sector (and your role) developing?
Over the five years I have been at Insight, I have watched LDI move from being on the left field into the mainstream. As pension funds become more accepting of the usefulness of derivatives in implementing and managing their investment strategies, there are many opportunities to expand our mandates in new directions, for instance, managing clients’ credit and equity exposure.

What advice would you give to others?
Think about what role you would want as an investment manager. There are not many actuaries working in portfolio management, but there are many other roles within LDI where actuaries contribute including quantitative analysis, solution design, product specialists and client servicing. Build a diversified skill-set and maintain a keen interest in learning everything you can about the world of investment.

Douglas Wright,
lecturer at Cass Business School,
City University
How did you come to be working in this sector?

On completion of my PhD, it was a natural progression to move into academia. The role of universities in actuarial education has expanded considerably in recent years so the timing was ideal, and it has been very exciting to play a small part in the developments that have been made.

What are the main opportunities/challenges?
The main opportunities for universities are to build on the recommendations of the Morris Review and take a more prominent role in the development and training of new entrants to the profession. Also to continue to produce world-class research in the field of actuarial science and encourage collaboration with other disciplines, ensuring that the profession continues to be at the forefront of managing the increasingly complex financial risks faced.

How has your actuarial background helped you?
Without my studies and work experience, it would be very difficult to develop the next generation of actuaries successfully.

How do you see the sector (and your role) developing?
I can only see the role of universities in the training of actuaries continuing to grow. We are uniquely placed to give students the basic skill-set required, not just the technical skills but also the softer skills and a basic understanding of the financial world. However, we must work in tandem with employers, as there is no substitute for practical experience.

What advice would you give to others?
I would highly recommend it. It gives me great pleasure to feel that we have played in part in helping students succeed in their chosen career.

Eamon Kelly,
micro-insurance programme manager,
India (Inter Aide)
How did you come to be working in this sector?

Development work interested me as being something that had an impact on people’s lives but I was unsure how my actuarial skills could be used. I became aware of micro-finance and micro-insurance, a good friend put me in touch with the programme founders here in India and I decided to try it out.

What are the main opportunities/challenges?
Deriving and applying practical and pragmatic solutions in a developing field, in a developing country, and helping to educate very poor people about insurance and how it can help their lives in a meaningful way.

How has your actuarial background helped you?
Being able to see all the risks, connect the dots and think ahead beyond the next step, while also remembering that a technically correct solution is not always the best solution.

How do you see the sector (and your role) developing?
I see massive potential for the growth of micro-insurance. At present the health sector is filling a gap in provision of social services and while that exists then the needs will go unmet. It will be interesting to see how the balance of partner-agent and mutual-type models develop but there is room for lots of approaches.

What advice would you give to others?
It’s been a great experience working in India and I would recommend to anyone thinking of jumping from the safety of a corporate job to take the leap... what’s the worst that can happen? Certainly actuaries can add a lot of value in the micro-insurance world and the potential for growth is quite significant.

Myra Daly,
hedge specialist,
Meridian Energy
How did you come to be working in this sector?

I moved to New Zealand in 2006 and was offered a position with an energy retailer. The energy market here is highly volatile, with a largely illiquid futures market. Initially I worked on a project applying actuarial techniques to valuing the risks faced and calculating the risk capital required for certain levels of sufficiency. Since then I’ve worked on forecasting energy sales, purchases and revenues and helping to manage the overall portfolio.

What are the main opportunities/challenges?
Initially my main challenges were in understanding both the market and how actuarial techniques could be useful in a different context. Other challenges lie in communicating the results and trying to make sure they are relevant and understood.

How has your actuarial background helped you?
All aspects of portfolio management, risk management and valuations of assets and liabilities have relevance to my role. The mathematical background has certainly been useful, as have broader understandings of economics, investment and market structures. An actuarial background also provides problem-solving skills and approaches.

How do you see the sector (and your role) developing?
The energy sector is similar to insurance or pensions, where customer prices or rates are set in advance and the company’s financial outcome is dependent on often unpredictable events. Here, these events include the availability of generation, possible transmission issues, financial contracts, competitor activity and ultimately, what customers actually use. There are many aspects of insurance and pensions work that can be applied to help understand our exposures and overall position. I view our portfolio management as a traditional actuarial area and see my role as developing this understanding and its application as much as possible.

What advice would you give to others?
The actuarial skill-set is highly regarded and can be applied to any industry that requires an understanding of risks and risk management. Roles may not specifically require actuarial qualifications, however it’s important to consider potential for development. Communication and relationship skills are vital, especially when working with people from different departments.

Neil Walton,
head of strategy solutions,
Schroders

How did you come to be working in this sector?
An actuarial background and a strong interest in investment led me down a path of investment consulting with a large consulting firm. The investment side always seemed to make more difference to the outcome for clients than funding and legislation-driven actuarial advice. It was a natural extension to move to Schroders and provide input to clients reflecting the depth of views from a multi-asset global investment firm.

What are the main opportunities/challenges?
There are always opportunities to add value from either a risk-management or return-enhancing perspective due to the constant shifting sands of the financial markets. A challenge is the evolving governance structures of our clients and the changing interaction of the different participants, consultants, asset managers and pension funds.

How has your actuarial background helped you?
Actuarial training brings a proper view of timescales for long-term investors, a longer timescale than applies to many asset management decisions. It also helps in considering assets and liabilities together and in applying flexible problem-solving skills.

How do you see the sector (and your role) developing?
One of Myners’ themes was for pension funds to spend more time on strategic matters and to seek a variety of inputs in developing investment strategy. This is happening more and more, with the development of different business models from consulting firms and asset managers for institutional investors.

What advice would you give to others?
Follow your instincts and go for it. Each day is different and interesting in asset management.

Andrew Dobinson,
consultant,
Lane Clark & Peacock

Financial Dynamics practice
How did you come to be working in this sector?
After five years working in pensions I was looking for a new challenge. At the same time, LCP was starting to think about applying actuarial skills to help companies understand more about the risks they faced and make more informed decisions. Unusual client problems had been landing on our plates on an ad hoc basis, but the new Financial Dynamics (FD) department was set up to find those opportunities. Over the last three years I have worked on equity release plans, pre-paid funeral plans, equity valuations and intangible asset valuations. Last year I joined the Energy, Utilities and Regulated Industries (EURI) team within the FD department which helps companies make decisions about long-term investments and how to adapt to a changing business or regulatory environment.

What are the main opportunities/challenges?
There are lots of opportunities because companies in the EURI sectors are making major investment decisions all the time. The opportunity is to help companies make more informed decisions and to track the progress of their decisions over the lifecycle of investment in quantifiable terms. One of the major decisions facing companies is the mandated investment in smart metering technology which has the potential to revolutionise how energy companies operate and how customers interact with their energy usage. The main challenge is learning new industry regulation and jargon so that I’m able to interact with engineers and industry experts as well as finance directors.

How has your actuarial background helped you?
Actuarial training gives you an ability to learn new concepts quickly and to interpret and explain complex problems. When talking to clients about their business, I try to take on board as much of their knowledge of the issues they face as quickly as possible. I can then use this to inform any modelling necessary, keeping in mind that the model must be robust over long time periods, and most importantly must be capable of helping to inform decision-making.

How do you see the sector (and your role) developing?
I see there being an increased focus on risk management within businesses generally, not just the EURI sector. I see my role moving from risk management and decision support on a project-by-project basis to embedding scientific thinking within clients’ businesses more generally.

What advice would you give to others?
Try to work with different people, not just actuaries. It is important to work with, and learn from, people who have consulted, or been employed directly, within the industry.

Chris Watts,
Pensions Advisory Group,
J.P. Morgan
How did you come to be working in this sector?

I started my career at Barnett Waddingham but after qualifying in 2002 decided to take a sabbatical. I had always enjoyed being involved in unusual and interesting projects and banking seemed like an exciting way to continue to do that. I joined a J.P.Morgan team focusing on helping pension schemes and insurance companies use derivatives to reduce their risks. I quickly became involved in other projects and areas -- including helping the bank make an investment in a start-up pension insurance buyout firm and working with equity release mortgages -- and have focused for the last two years on developing a market in Longevity and Mortality risk transfer (in particular the LifeMetrics platform) - helping pension schemes and insurers globally manage these risks.

What are the main opportunities/challenges you face?
The main opportunity relates to the flexibility around the things you can try and do. Large banks tend to have teams who are given a certain area to work in. This is commonly split by combinations of: Geographic area - a country or region Industry – say, pension schemes and insurers Product/function - be it equity derivatives sales, government bond trading, advice on M&A or providing research Within a particular team there is a huge amount of flexibility about what the focus should be. Of course there a plethora of internal checks to make sure that the ideas are good for the firm as a whole but the ability for the firm to take on considered risks provides a wide range of things that can be pursued.

How has your actuarial background helped you?
Broad financial, economic and accounting knowledge and the ability to analyse complex financial problems is important throughout the whole of the financial services industry. That background is very useful for general banking roles. More commonly, however, the specialist industry knowledge provides a very useful set of skills for the roles that actuaries often come into banking to fill – those relating to pensions and insurance.

How do you see the sector (and your role) developing?
My current longevity focused role is of increasing interest to both pension schemes and insurance companies and I think this suggests a promising future. It will evolve as that interest and the market in transferring these risks starts to mature. The skills that actuaries have will always be useful.

What advice would you give to others?
Be patient while you look for the right post and have a good understanding of what role you would like to do and then develop your knowledge and skills in that area.

Paul Walsh
CEO
Acumen Resources Actuarial Recruitment

How did you come to be working in this sector?
A combination of (i) wanting to work for myself (ii) preferring the people side of the business to traditional actuarial work and (iii) having experienced a poor service when I used a recruiter in the past, all convinced me this was a niche I could succeed in.

What are the main issues/opportunities/challenges faced?
You have to be empathetic. I am continually surprised by how much personal and sensitive information a person will impart to you during the recruitment process, particularly when they are feeling at a low ebb. In contrast, when you succeed in securing their ideal role there is a huge sense of both personal and professional satisfaction in being able to help them.

How has your actuarial background helped you?
My broad actuarial knowledge is useful in understanding a candidate’s technical experience, their transferable skills and advising on the different working environments. I’m still in a business development role; meeting clients, marketing & advertising and looking for new opportunities to expand our reach both in the UK and internationally. Communication, listening and perception skills are key to enable me help a candidate identify which type of role will best suit them. Coaching skills and being objective with people are also necessary as we help candidates with interview practice, career aspirations and salary expectations.

How do you see the sector (and your role) developing?
Hopefully more actuaries will enter the sector, which will benefit both the international actuarial and recruitment communities alike. There is a trend for companies to outsource their recruitment functions to third party providers and that as a specialist agency we aim to partner even more closely with our clients and manage their entire recruitment process. Our ultimate aim is to build world class actuarial teams for our clients.

What advice would you give to others?
It’s not a calling like being a nurse or a doctor, but you have to want to help people. There are so many personal factors involved when a person wants to move job that you become a trusted advisor to people, not just an agent.