Actuarial Consulting

Actuarial Consulting

When to Use

• Frame a new actuarial consulting engagement (objectives, boundaries, independence)
• Draft or review SOW, fees, data access, and deliverable list for actuarial work
• Plan stakeholder communications (CFO, CRO, board, audit committee, regulators—overview)
• Support M&A, divestiture, or reinsurance due diligence on reserves, pricing, and capital
• Structure reserve opinion, pricing review, or capital assessment engagements (not sole modeler)
• Scope model validation, peer review, or opinion-support workpapers
• Prepare regulatory meeting materials (talking points, exhibit index—not legal filings)
• Design deliverable packages: actuarial memo, exhibits, management presentation, Q&A log
• Run project governance: timeline, quality review, documentation, and sign-off chain

When NOT to Use

• Execute pricing triangles, IBNR development, or assumption fitting as primary deliverable → actuary
• Teach P&C coverages, claims handling, or underwriting mechanics without engagement lens → property-casualty-insurance
• Interpret contracts, policy wording, or provide legal/regulatory enforcement advice → commercial-counsel
• Corporate FP&A, budgets, or non-insurance investor metrics → financial-analyst (if installed)
• Strategy, operating model, or transformation without actuarial workstream → business-consultant
• SOC 2 / ISO control mapping and technical audit evidence → compliance-engineer
• Cross-team software delivery, RAID, and program milestones only → technical-program-manager

Related skills

Core Workflows

1. Engagement framing and independence

1. Clarify client role (insurer, reinsurer, investor, regulator-facing company, TPA) 2. Define decision the engagement supports (transaction, opinion year, model approval, board review) 3. Document independence constraints (prior work, management roles, advocacy vs advisory) 4. Identify conflicts (same team pricing and opining; data vendor ties) 5. Set success criteria and explicit out-of-scope items

See `references/actuarial_consulting_scope.md`.

2. Scoping and SOW

1. List deliverables with format (memo, workbook, presentation, data request) 2. Specify data owners, cutoffs, legal hold, and confidentiality 3. Define methods at headline level; defer technical picks to actuary workstream 4. Agree timeline, review gates, and client point-of-contact 5. Include fees, change-control, and reliance limitations

See `references/engagement_scoping_and_sow.md`.

3. Client deliverables and communication

1. Map audiences (CFO, CRO, board, external auditor, regulator—overview) 2. Build storyline: issue → analysis → implication → decision or open item 3. Separate executive summary from technical appendix and exhibits 4. Prepare management presentation and anticipated Q&A 5. Log version control, distribution list, and redaction rules

See `references/client_deliverables_and_communication.md`.

4. Due diligence and M&A support

1. Scope blocks (reserves, pricing, capital, reinsurance, run-off, embedded value) 2. Request data room index aligned to actuarial questions 3. Define red-flag checklist (development spikes, one-time items, model changes) 4. Structure findings by materiality and deal impact (not investment advice) 5. Hand off deep modeling to actuary; legal terms to commercial-counsel

See `references/due_diligence_and_ma_support.md`.

5. Model review and validation engagements

1. Classify engagement type (validation, peer review, opinion support, use test) 2. Inventory models, owners, version, and intended use 3. Plan testing themes (assumions, implementation, governance, output reasonability) 4. Document findings severity, remediation, and re-test criteria 5. Coordinate with appointed actuary or signatory where applicable

See `references/model_review_and_validation_engagements.md`.

6. Regulatory, board, and governance

1. Clarify forum (examination prep, board risk committee, audit committee) 2. Align messages to prior filings and public disclosures 3. Prepare exhibit index and backup schedules—not substitute for counsel 4. Track action items, responsible owners, and dates 5. Archive workpapers per firm policy and professional standards (overview)

See `references/regulatory_board_and_governance.md`.

Engagement kickoff checklist

Copy and track at project start:

Engagement kickoff:
- [ ] Signed SOW / engagement letter with limitations
- [ ] Independence and conflict memo on file
- [ ] Data request issued; owners and cutoff agreed
- [ ] Internal team: EM, technical actuary, reviewer, PM (if needed)
- [ ] Client RACI: sponsor, data SME, signatory actuary
- [ ] Deliverable formats and draft review dates
- [ ] Escalation path (client + firm risk/quality)

Engagement type matrix

When multiple types apply (e.g., M&A plus validation), split workstreams in the SOW with separate timelines and reviewers.

Quality review and sign-off

Before any client-facing draft:

1. Technical completeness — exhibits tie to data cutoff; bridges reconcile 2. Narrative consistency — memo, deck, and appendix use same definitions 3. Audience test — executive summary understandable without actuarial training 4. Independence check — no advocacy language beyond supported analysis 5. EQ / peer review — logged comments resolved or documented as exceptions 6. Versioning — draft watermark until final; distribution list approved

Coordinate with technical-program-manager when actuarial work is one stream in a larger transaction program (shared milestones only).

Deliverable standards

State uncertainty, reliance limits, and non-advice boundaries. Do not present consulting output as statutory filing, legal opinion, or appointed-actuary sign-off without qualified human review.

Common pitfalls

• Scope creep without change order when new LOBs or models are added mid-engagement
• Orphan exhibits that do not support a stated conclusion in the memo
• Metric drift between deck, memo, and public filings
• Dual role pressure (consultant validates own prior model build)
• Missing data treated as zero rather than flagged as limitation
• Regulatory meeting prep that crosses into legal interpretation—escalate to commercial-counsel

When to load references

• Scope, independence, ethics → references/actuarial_consulting_scope.md
• SOW and scoping → references/engagement_scoping_and_sow.md
• Memos, decks, stakeholder comms → references/client_deliverables_and_communication.md
• M&A and due diligence → references/due_diligence_and_ma_support.md
• Model validation and review → references/model_review_and_validation_engagements.md
• Board, regulatory prep, governance → references/regulatory_board_and_governance.md

Actuarial consulting scope

Table of contents

1. Role boundary 2. Engagement types 3. Independence and conflicts 4. Professional standards (overview) 5. Documentation and quality 6. Handoffs to technical actuary work

Role boundary

Actuarial consulting frames how actuarial work is sold, governed, communicated, and reviewed. It is distinct from:

Engagement types

Scope each engagement to one primary purpose. Split pricing and reserving opinions across teams when independence requires.

Independence and conflicts

Document before work begins:

• Prior services to the same entity (pricing, validation, software selection)
• Management roles (CFO actuary, board observer) that constrain advocacy
• Data vendors or software partners with economic ties
• Contingent fees tied to deal outcome (generally avoid for opinion work)

When conflicts cannot be cleared, narrow scope, add disclosure, or decline.

Professional standards (overview)

Align workpapers to jurisdiction-specific actuarial standards (e.g., US ASOPs, IAA guidance) at a high level:

• Purpose and intended user of the work
• Documentation sufficient for another qualified actuary to evaluate
• Limitations of data, methods, and reliance on others
• Communication appropriate to audience sophistication

Do not claim appointed actuary, qualified actuary sign-off, or legal compliance unless the user holds that authority.

Documentation and quality

Minimum consulting file structure:

engagement/
├── SOW and change orders
├── data inventory and reliance letters
├── analysis/ (technical work by actuary team)
├── review log (EQR, peer review)
├── deliverables/ (memo, exhibits, deck)
└── correspondence/ (management, board, regulator)

Quality gates:

• Partner or qualified reviewer sign-off before client delivery
• Versioned exhibits tied to data cutoff
• Traceability from conclusion to exhibit

Handoffs to technical actuary work

Consulting ends where repeatable calculation begins. Hand off to actuary when the user needs:

• Triangle development and IBNR selection
• Mortality/morbidity studies and credibility weighting
• Detailed pricing indications by segment
• Capital model runs and stress testing execution

Retain consulting ownership of narrative, governance, and stakeholder packaging.

Client deliverables and communication

Table of contents

1. Audience mapping 2. Actuarial memo structure 3. Exhibits and workpapers 4. Management presentation 5. Q&A and issue log 6. Distribution and redaction

Audience mapping

Match tone to role: executives need decision-ready bullets; technical readers need exhibits.

Actuarial memo structure

Recommended outline:

# [Engagement title] — Actuarial Memorandum

**Date | Prepared for | Purpose | Limitations**

## Executive summary
- Scope, conclusion headline, material findings (3–7 bullets)

## Background and scope
- Decision, data period, LOBs, standards referenced (overview)

## Methods summary
- Headline methods; point to exhibits for detail

## Results
- Key metrics, bridges (prior to current), ranges where appropriate

## Findings and recommendations
- Numbered findings; owner; target date

## Limitations and reliance
- Data, scope, non-advice

## Exhibits index

Keep the memo self-contained for executives; move tables to numbered exhibits.

Exhibits and workpapers

Rules:

• One message per exhibit; title states the takeaway
• Footnote data cutoff and definitions
• Cross-reference memo section ↔ exhibit number

Management presentation

Target 5–12 slides:

1. Context and decision 2. Scope and approach (one slide) 3. Headline results 4. Material findings (ranked) 5. Sensitivities or scenarios (if decision-relevant) 6. Recommendations and open items 7. Appendix index (optional backup)

Use consistent metrics with memo and prior public disclosures. Prepare speaker notes with anticipated challenges.

Q&A and issue log

Maintain during engagement:

Use for workshop readouts, board prep, and final memo “open items” section.

Distribution and redaction

• Define distribution list (names, not “management”)
• Redact policyholder PII and counterparty terms in external packs
• Version files: Memo_v1.0_draft, Memo_v1.0_final
• Store final PDF and source workbook paths in engagement index

For transaction work, align with data room rules and commercial-counsel on what may leave the room.

Due diligence and M&A support

Table of contents

1. DD engagement framing 2. Workstreams 3. Data room and requests 4. Red-flag checklist 5. Findings and reporting 6. Post-close and transition

DD engagement framing

Clarify up front:

Consulting delivers structure and communication; actuary executes technical testing.

Workstreams

Scope LOBs with premium or reserve weight first; expand if red flags appear.

Data room and requests

Standard actuarial data request list (tailor):

• Paid and incurred loss triangles (10+ years where available)
• Premium and exposure by segment
• Reinsurance schedules and recoverables aging
• Large loss and catastrophe listings
• Prior actuarial reports, statements of opinion, APAC memos
• Pricing indications and rate filings (overview)
• Model documentation and validation reports

Track received / partial / missing in a matrix; escalate gaps to deal lead.

Red-flag checklist

Investigate when present:

• Prior-year development spikes without narrative
• Reserve releases driving earnings
• Methodology changes near transaction date
• Large single claims or litigation not in case reserves
• Reinsurance disputes or slow collectibility
• Data quality breaks (unreconciled triangles)
• Inadequate documentation for appointed actuary opinion
• Aggressive loss trend or discount assumptions
• New products with thin experience priced below indication

Rate each: High / Medium / Low impact and High / Medium / Low confidence.

Findings and reporting

Finding template:

### Finding [n]: [Short title]
- **Area:** Reserves | Pricing | Capital | Reinsurance | Models
- **Observation:** [Fact tied to exhibit]
- **Impact:** [Range or directional effect on deal metrics]
- **Recommendation:** [Further work, price adjustment, rep/warranty, none]
- **Evidence:** Exhibit X, data cutoff Y

Separate confirmatory items resolved before close vs post-close monitoring.

Do not provide investment advice or purchase price recommendations unless explicitly scoped and qualified.

Post-close and transition

Optional follow-on scopes:

• Opening balance reserve true-up support
• Transition services (model transfer, assumption alignment)
• 100-day model validation or reserve committee setup

Hand legal drafting (R&W, escrow) to commercial-counsel; hand ongoing reserving to client or actuary retainer.

Engagement scoping and SOW

Table of contents

1. Scoping intake 2. SOW structure 3. Data and access 4. Fees and change control 5. Reliance and limitations 6. Milestone and review plan

Scoping intake

Capture in writing before proposal:

SOW structure

Recommended sections:

1. Background and objectives — decision supported, not marketing language 2. Scope of services — in-scope tasks as verbs (review, validate, opine support, advise) 3. Out of scope — explicit exclusions (tax, legal, IT implementation, investment advice) 4. Deliverables — title, format, recipient, draft vs final 5. Client responsibilities — data, SMEs, workshop attendance 6. Timeline and dependencies — data receipt gates 7. Fees and expenses — fixed, T&M, cap, invoicing 8. Confidentiality and data security 9. Reliance and limitations — third parties, public use 10. Governing law and dispute — coordinate with commercial-counsel

Deliverable examples (pick applicable)

• Actuarial memorandum (PDF + workbook index)
• Reserve / pricing review exhibit set
• Model validation report with finding register
• Management presentation (PPT) and speaker notes
• Data request list and reconciliation memo
• Board or regulatory briefing pack (slides + appendix index)

Data and access

Specify in SOW:

Flag incomplete data as a scope change trigger, not an silent assumption.

Fees and change control

Change orders for: new LOBs, extended opinion support, additional models, regulator requests outside SOW.

Reliance and limitations

Standard limitations (adapt with counsel):

• Work for client management only unless named reliance parties listed
• Not legal, tax, or investment advice
• Subject to data accuracy provided by client
• No guarantee of regulatory acceptance or deal closure
• Effective date of analysis; no duty to update unless retained

Milestone and review plan

Example timeline for reserve review engagement:

Build buffer before board, audit, or regulatory dates.

Model review and validation engagements

Table of contents

1. Engagement types 2. Scope and criteria 3. Testing themes 4. Findings and severity 5. Remediation and re-test 6. Opinion support coordination

Engagement types

Define independence requirements before accepting validation of models the firm built.

Scope and criteria

Document in SOW:

• Model name, version, owner, platform
• Intended use (pricing, reserving, capital, ALM)
• Materiality threshold for findings
• Standards referenced (firm model risk policy, SR 11-7 overview for banks if relevant)
• Access: code, parameters, test data, change logs

Deliverable: validation report + finding register + management letter if required.

Testing themes

Depth scales with model materiality and regulatory classification (overview only).

Findings and severity

Finding format:

• ID, title, severity, description, evidence
• Recommendation, management response, target date

Remediation and re-test

Track to closure:

1. Management action plan with owner and date 2. Re-test evidence for Critical/High items 3. Conditional approval language if issues remain 4. Annual re-validation trigger for material model changes

Do not sign unqualified validation language while Critical findings are open unless scope explicitly allows with disclosure.

Opinion support coordination

When supporting statutory or regulatory opinion:

• Align data cutoff with opinion date
• Reconcile validation conclusions to statement of actuarial opinion exhibits
• Maintain reviewer documentation separate from client marketing materials
• Escalate legal interpretation of filing requirements to commercial-counsel

Consulting owns process and documentation index; appointed actuary owns opinion text and sign-off.

Regulatory, board, and governance

Table of contents

1. Governance forums 2. Regulatory interaction prep (overview) 3. Board and committee packs 4. Consistency with public disclosure 5. Project governance 6. Escalation paths

Governance forums

Clarify whether the consultant presents, attends, or prepares materials only.

Regulatory interaction prep (overview)

Not legal advice. Consulting supports:

• Exhibit index aligned to prior filings
• Assumption change log since last examination
• Talking points for management (consistent with memo)
• Workpaper organization for document requests
• Mock Q&A on methods and data period

Escalate to commercial-counsel for:

• Interpretation of statutes and regulations
• Privilege strategy
• Enforcement response

Coordinate with client appointed actuary on opinion-related topics.

Board and committee packs

Minimum pack structure:

1. Cover memo (1–2 pages): purpose, recommendation, vote needed 2. Dashboard metrics: reserve, PYD, pricing, capital (consistent definitions) 3. Deep-dive appendix for material movements 4. Glossary of actuarial terms for non-specialist directors

Timing: distribute 48–72 hours before meeting when possible; version all materials.

Consistency with public disclosure

Before delivery, cross-check:

• Prior 10-K / statutory annual statement narratives
• Earnings call commentary on reserves and cat losses
• Rating agency presentation metrics
• Investor day slides if transaction-related

Flag inconsistencies to CFO and counsel; do not silently change defined metrics.

Project governance

Align large engagements with technical-program-manager for cross-workstream dates only; retain actuarial content ownership in consulting lead.

Escalation paths

Escalate immediately when:

• Data integrity cannot be resolved before deadline
• Management pressure to change conclusions without evidence
• Scope creep threatens independence or quality
• Legal privilege or regulatory subpoena issues arise
• Material error discovered in prior signed work

Document escalation in writing; involve firm risk management or quality function per policy.