SUP 4.6 1Lloyd's
Appointment of the Lloyd's actuary and syndicate actuaries
The Society must:
- (1)
appoint an actuary to perform the Lloyd's actuary function4;
4 - (2)
notify the FSA, without delay, when it is aware that a vacancy in the office of Lloyd's actuary will arise or has arisen, giving the reason for the vacancy;
- (3)
appoint an actuary to fill any vacancy in the office of Lloyd's actuary that has arisen; and
- (4)
ensure that the replacement actuary can take up office at the time the vacancy arises or as soon as reasonably practicable after that.
The functions performed by the actuary appointed as the Lloyd's actuary under SUP 4.6.1 R are specified as controlled functions in SUP 10 (Approved persons). As a result, an application must be made to the FSA under section 60 of the Act (Applications for approval) for approval of the person proposing to take up such an appointment. Section 61(3) of the Act (Determination of applications) gives the FSA three months to grant its approval or give a warning notice that it proposes to refuse the application. An actuary should not be appointed until the FSA has approved the actuary. In order to comply with SUP 4.6.1 R, the Society should ensure it applies to the FSA as soon as practicable before the date when it needs the actuary to take office. The FSA will need time to consider the application before deciding whether to grant approval.
Qualifications
Before the Society applies for approval of its proposed appointment of the Lloyd's actuary under SUP 4.6.1 R, it must take reasonable steps to ensure that the actuary:
- (1)
has the required skill and experience to perform his functions under the regulatory system; and
- (2)
is a Fellow of the Institute of Actuaries or of the Faculty of Actuaries.
To comply with SUP 4.6.3 R and Principle 3, before the Lloyd's actuary takes up his appointment the Society should ensure that the actuary:
- (1)
has skills and experience appropriate to the nature, scale and complexity of the Society's business and the requirements and standards under the regulatory system to which it is subject; and
- (2)
has adequate qualifications and experience, which includes holding an appropriate practising certificate under the rules of the Institute of Actuaries or the Faculty of Actuaries;
and seek confirmation of these from the actuary, or the actuary's current and previous employers, as appropriate.
Disqualified actuaries
The Society must not appoint under SUP 4.6.1 R as Lloyd's actuary an actuary who is disqualified by the FSA under section 345 of the Act (Disqualification) from acting:
- (1)
- (2)
as a syndicate actuary; or
- (3)
If it appears to the FSA that an actuary has failed to comply with a duty imposed on him under the Act, it may disqualify him under section 345 of the Act. For more detail about what happens when the disqualification of an actuary is being considered or put into effect, see EG 153. A list of actuaries who are disqualified by the FSA may be found on the FSA website.
3Conflicts of interest
The Society must take reasonable steps to ensure that an actuary who is to be, or has been, appointed under SUP 4.6.1 R:
- (1)
does not perform the function of chairman or chief executive of the Society; and
- (2)
does not perform any other function on behalf of the Society which could give rise to a significant conflict of interest.
The Lloyd's actuary function
An actuary who has been appointed to perform the Lloyd's actuary function 5must:
5- (1)
prepare the statement required under IPRU(INS) 9.58 (1)2 to be annexed to the Lloyd's Return; and
2 - (2)
take reasonable steps to ensure that the general insurance business technical provisions for each syndicate year have been reviewed by the syndicate actuary and that an appropriate opinion has been obtained under SUP 4.6.15 R; and
- (3)
where a syndicate actuary's opinion has not been provided, sets appropriate technical provisions and, within six months of the end of the financial year, submits a report to the FSA on the setting of those technical provisions.
Appointment of syndicate actuaries
Each managing agent must, in respect of each syndicate it manages:
- (1)
appoint an actuary (the "syndicate actuary") to carry out the duties described in SUP 4.6.15 R or SUP 4.6.16 R; and
- (2)
appoint a replacement for that actuary if he ceases to hold office before he has carried out the duties described in SUP 4.6.15 R or SUP 4.6.16 R; and
- (3)
ensure that the replacement syndicate actuary can take up office at the time the vacancy arises or as soon as reasonably practicable after that.
- (1)
The insurance market direction and guidance set out in SUP 3.1.4 G to SUP 3.1.15 G is relevant to actuaries appointed to report on the insurance business of members.
- (2)
References in SUP 4, as applied by SUP 4.1.3 R, to a firm include, where appropriate:
- (a)
a managing agent; and
- (b)
one or more member carrying on insurance business at Lloyd's policy through a syndicate;
and references to an actuary of a firm should be read accordingly.
- (a)
Syndicate actuaries' qualifications
Before a managing agent appoints a syndicate actuary, it must take reasonable steps to ensure that the syndicate actuary:
- (1)
has the required skill and experience to perform his duties; and
- (2)
is a fellow of an actuarial body or (except for a syndicate actuary of a long-term insurance business syndicate) is a fellow of the Casualty Actuarial Society who is a member of an actuarial body.
To comply with SUP 4.6.11 R and Principle 3, before a syndicate actuary takes up his appointment a managing agent should ensure that the syndicate actuary:
- (1)
has skills and experience appropriate to the nature, scale and complexity of a syndicate's business and the requirements and standards under the regulatory system applicable to the activities of managing agents in relation to each syndicate which they manage; and
- (2)
has adequate qualifications and experience, which includes holding an appropriate practising certificate under the rules of the Institute of Actuaries or the Faculty of Actuaries;
and seeks confirmation of these from the syndicate actuary, or the syndicate actuary's current and previous employers, as appropriate.
Disqualified actuaries
A managing agent must not appoint under SUP 4.6.9 R as syndicate actuary an actuary who is disqualified by the FSA under section 345 of the Act (Disqualification) from acting:
- (1)
as a syndicate actuary; or
- (2)
as a Lloyd's actuary; or
- (3)
If it appears to the FSA that an actuary has failed to comply with a duty imposed on him under the Act, it may disqualify him under section 345 of the Act. For more detail about what happens when the disqualification of an actuary is being considered or put into effect, see EG 153. A list of actuaries who are disqualified by the FSA may be found on the FSA website.
3Duties of syndicate actuaries
The syndicate actuary of a long-term insurance business syndicate must:
- (1)
make an investigation at the end of each financial year into the financial condition of the business carried on through each syndicate year (other than a closed year);
- (2)
make an abstract of his report of the investigation; and
- (3)
prepare the certificate required under IPRU(INS) 9.58 (3)2 to be annexed to the Lloyd's Return.
2
The syndicate actuary of a general insurance business syndicate must:
- (1)
review the technical provisions (both gross and net of reinsurance recoveries) of each syndicate year (other than a closed year); and
- (2)
provide his opinion confirming that the technical provisions for each syndicate year are no less prudent than his best estimate of the amounts required.
If a managing agent becomes aware that the syndicate actuary of a general insurance business syndicate will or may be unable to produce an unqualified opinion under SUP 4.6.16 R, the managing agent must promptly inform the FSA that this is the case.
In carrying out his duties a syndicate actuary must pay due regard to generally accepted actuarial best practice.