Alec Findlater curriculum
United Kingdom

Author
 
Date: Thursday, March 21

Session: 82

Life


Paper

   Reinventing Annuities
 


Presentation

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Summary

Traditional guaranteed annuities have suffered from some or all of the following problems in many markets around the world:
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customer perceptions: poor value, loaded bet which the insurance company usually wins, declining value where offered in a market subject to falling bond yields
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life companies: improvements in life expectancy greater than assumed in pricing, uncertainty as to future rates of improvement, exposure to radical improvement through improvement in healthcare, genetic and other scientific advance
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government and corporate bond issuers: sufficient bonds may not be issued by volume and duration and structure to meet demand.

The paper proposes an annuity structure which:
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presents the annuity as an investment product
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unbundles investment and insurance components
• allows for variations in the structure of each component through time:
- for investment, to optimise risk/reward according to individual preferences
- for insurance, to allow for transition to greater protection against longevity through time and for variations in the extent of guarantees of the cost of this insurance between providers
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sets maximum and minimum limits for drawing income from the fund at outset and at regular intervals thereafter.

The levels at subsequent reviews will depend on the actual investment and longevity experience versus that assumed at the last review. Income taken between reviews can vary between the maximum and the minimum. The proposed structure accommodates customer requirements for flexibility and choice in the 21st century and is able to use the communication technologies of that century to deliver these benefits.

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 Alec Findlater

Curriculum
Alec qualified as a Fellow of the Institute of Actuaries in the UK in 1990, after graduating in mathematics at Oxford University. He worked for AXA companies in the UK for 14 years, primarily on product design, market analysis and corporate planning.

In 1998 he joined Watson Wyatt, as part of the Financial Institutions Research and Strategy team. A major part of his work with Watson Wyatt has related to the area of capital to income conversion vehicles in retirement.

In the past couple of years he has been involved in a number of innovative annuity product developments, and he co-authored the paper "Reinventing Annuities" presented to the Staple Inn Actuarial Society in London in January 2001. In addition to work on product developments, Alec has also conducted a number of market analysis projects relating to the UK and Europe.

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Author