Western & Southern

**The postings on this site are exclusively my own and do not represent in any way Western & Southern Financial Group's (including its member companies) positions or opinions.

 http://www.westernsouthern.com/

          Through my time spent being an intern, I have taken many opportunities to explore Western & Southern. Some of these opportunities include researching the company on the internet and the company’s intranet, meeting with a number of employees in the company, and by attending meetings, such as my new hire orientation. Through these experiences I have learned about the company’s motto and mission, became familiar with the actuarial departments in the company, and have realized that I would love Western & Southern to be my future employer.

          Through my research on the internet I have learned about Western & Southern’s motto and mission statement. Western and Southern always talks about its four C’s with the company’s employees. “Culture + Capital + Competence + Capacity = W&SFG.” The CEO, John Barrett spent about 30 minutes discussing the importance of capacity to the actuaries during an actuarial department meeting. To summarize my the notes I took from the meeting, the actuarial department needs to continue to find innovative ways to expand our role in the company without increasing our resources or decreasing our efficiency.

          The Four C’s also relate to Western and Southern’s “fresh water” approach to insurance: “Develop the finest culture possible while building the best capital cushion in the industry.” This fits right in with the company’s reputation for being so conservative. After seeing the figures exclusively shared from within the company, I can say that Western & Southern has a very comfortable cushion (which is great when assessing the company’s ability to possibly fund my future 401K). Ultimately, Western & Southern believes that “if we out dream + out think + out work = we will out perform.” From what I have seen as an employee, the company is certainly on the right track.

          Through my experiences I have also became familiar with the departments associated with actuarial work. These departments include all the actuarial departments, as well as the legal and corporate accounting department. The actuarial departments include Life Products, Forecasting & Risk Analysis, Financial Reporting, and the department.

          The Life Product Department has 3 main responsibilities: they design and create new products, the re-price current products being sold, and the review current products. The central question they ask themselves is “Are products selling well?” – if they are not, they have to fix it. The department also works with PITS, or Product Implementation Teams. After the Life Product Deparment Designs a product, the legal department has to ensure that the “contract” won’t have any problems in the court of law, the marketing department has to figure out how to brand the product, and a variety of other departments have to learn about the product as well. The PITS will look at the draft of the product, critique it, and ship it back to the Life Product Department. The Life Product Department then re-tests the product under simulations, and ensure the product will still be profitable and competitive.

          The Forecasting and & Risk Analysis Department is an emerging department in many insurance companies today. In the 90’s US legislation began to require insurance companies to set aside a dependable amount of “reserve” money for the policies they issue. This legislation protected policyholders as it forced Insurance Companies set aside money and make reports so that in any given year, the company is very unlikely to have to default on their expected claims. Doing these projections and reporting on them is this department’s main responsibility, but this work only accounts for a part of the year. More and more, insurance companies are making this work done by its own department, which can then continue to do research during the other portions of the year, providing valuable information to the insurance company as a whole. After F&RA does their reserve projections, they convert their work to Cash Flow Testing, then do planning work with the Valuation Department, and finally do Model Improvement, before going through the cycle again.

          The Pricing Department prices all annuities and employs hedging programs. Typically when a person buys an annuity from W&S, W&S will take a portion of the money and invest in bonds. In the broadest sense, an actuary is person employed to assess risk for a company. Typically in annuities actuaries account for two forms of risk: 1) the risk that a person will live longer than expected (and W&S will have to continue to make payments on their annuity), and 2) the reinvestment risk (the risk that when W&S has to buy another bond to continue to help pay off the annuity, the interest rate W&S receives on the bond is less than previously). Some of the products this department works with are Single Premium Interest Annuities (SPIAs), Deferred Annuities, Market Value Adjusted Annuities, Indexed Annuities, and Variable Annuities.

The Financial Reporting Department does a lot of studies including studies on mortality, costs, and roll forwards. Roll forwards explain why reserves change from one month to another. Many other actuarial departments use their studies and numbers to do their work. For example, Life products look at the life and cost studies to help determine how expensive their products need to be. Financial Reporting works a lot with the accounting department as well. Mainly, FR get their numbers they use to create a study from the accounting department.

The Valuation Department does a lot of case studies. Currently I am working on a case study that analyzes policy holder behavior. I determine the shock lapse rate for market value adjusted policies that are nearing the end of its surrender charge or guarantee period. Basically when a person buys (or puts money into) an annuity, they have to keep their money in the annuity for a number of years before they are allowed to take money out. Right at the end of that period, it is much more likely that money will be taken out of the annuity instead of the money being taken out at a later time. The proportion of policies that take all their money out at that time is the shock lapse rate. Other actuarial departments use case studies to help them evaluate and price their products.

Through my experience at Western & Southern, I have learned that I would love to start my career there. W&S has a great actuarial study program, amazing company culture, and I have received nothing but support since I started working there. I love going to work every day, and I can envision a long career at that company. Today, I accepted a career of from Western & Southern: I will begin working for them as an Actuarial Analyst at the end of August following my graduation and my travel plans in Europe. J