Ensuring & Evidencing

TCF for With-Profits

9.00 Registration Open

9.30 Chairperson’s Introduction

Andrew Chamberlain
WATSON WYATT

9.40 TCF and With-Profits: the FSA’s Perspective

The fair treatment of with-profits policyholders remains a key focus for the FSA, as seen in the recently published a Consultation Paper on compensation and redress in with-profits funds. This session will seek to clarify regulatory expectations and illustrate potential pitfalls for with-profits firms. Accordingly, this presentation will cover:

• FSA Consultation Paper on mis-selling liabilities
• Key challenges and risks for with-profits firms
• How could they do better
• Future development

Sarah Wilson
Director, Treating Customers Fairly & Insurance Sector Leader
FINANCIAL SERVICES AUTHORITY

10.20 Rearranging Assets to Meet TCF for With-Profits Policyholders

The recent focus of FSA on Treating Customers Fairly (TCF) has affected the whole insurance industry, but has particular impact on with-profits business. The FSA has credited the decline of with-profits business with "behavioural changes", but this is not the whole story. With-profits policies remain an effective product, but companies must demonstrate their fairness in the light of needing to meet the FSA's TCF requirements by December 2008.

• Attributions of inherited estates
• Part VII transfers
• Solvency II
• Risk management and the WP fund

Pollyanna Deane
Partner
BERWIN LEIGHTON & PAISNER

11.00 Refreshment

11.20 Managing Intergenerational Equity

Managing intergenerational equity is a key issue for open and closed funds as they decline in size and potential inequities bubble to the surface. This session will examine the nature of the issues which can arise and actions which can be taken to address these. The session will cover:

• What do we mean by intergenerational equity?
• What are the main sources of potential inequity?
• What can be done to address and manage these issues?

Phil Roberts
TOWERS PERRIN TILLINGHAST

12.00 Why is Governance Still an Issue? Ongoing Challenges and Developments in Best Practice

New governance arrangements for with-profits business were introduced at the beginning of 2005. Subsequently the FSA has issued various guidance on the interpretation of their rules. This session will discuss:

• The rules and guidance relating to with-profits governance in the FSA handbook
• Guidance subsequently issued by the FSA
• The implications of the Treasury Select Committee's review of inherited estate

Gerry Gallagher
With-Profits Actuary
PRUDENTIAL

12.40 Lunch

1.40 Effectively Communicating with With-Profits Customers

The FSA continues to regard customer communication as a priority area and as an important and visible indicator of how good with-profits businesses apply TCF in practice. This presentation will discuss where firms can improve so their with-profits communication meets the TCF requirements:

• Key Feature Documents
• Post-sale information and advice
• Quality of wake-up pack

Richard Waller
WATSON WYATT

2.20 Evidencing TCF in a With-Profits Business: Producing & Using Appropriate MI

So what's the problem? Why are so many firms failing to satisfy the FSA requirements in this area? As it is not just the practical difficulties that block success, this session might help to overcome two challenges to our mental models:

• Principles-based regulation - it's outcome-focussed, not ticks in boxes for the process
• Thinking from a different point of view - is your view of "fair" the same as the customer's?

John Cummings
PRICEWATERHOUSECOOPERS

3.00 Refreshment

3.20 Addressing the TCF Challenges for Closed Funds

Closed funds come in all shapes and sizes. But whether the challenge is how to distribute a large estate or how to meet the guaranteed benefits, TCF is an important part of the solution. Amongst other things, this presentation will address:

• Run-off plans and estate distribution
• The challenge of non-profit business
• Investing for a maturing fund
• Explaining it all to policyholders

Mike Kipling
Director of Asset/Liability Management,
Phoenix Life Division
PEARL GROUP

Panel Discussion

4.00 What Does the Future Hold for With-Profits?

With-profits funds have traditionally been the way most people in the UK invest when they have been looking for higher returns than a regular savings account. There are billions of pounds of investments in the with-profits market. However with the growing criticism in recent years customers have lost their faith in with-profits products. This session will discuss the future of the with-profits market, looking at issues such as:

• Is there still appetite for WP products?
• Are other savings vehicles filling the gap (if there is one)?
• Can the reputational and regulatory issues be overcome?
• Impact of TCF and RDR

Douglas Morrison
With-Profits Actuary
STANDARD LIFE ASSURANCE

Dr. Yvonne Braun
Assistant Director, Retail Market Regulation
ASSOCIATION OF BRITISH INSURERS

Mick McAteer
Founder / Director
THE FINANCIAL INCLUSION CENTRE

4.30 Chairperson’s Closing Remarks

4.40 Close of Conference

Following the implementation of the new Conduct of Business
Sourcebook (COBS) in 2007, the FSA expects with-profits firms
to be able to demonstrate effective financial management of
their funds in accordance with the treating customers fairly
principle.

The FSA is currently reviewing the rules and actively monitoring
the management of with-profits funds. The main areas of
concern include the distribution of the inherited estates, with a
specific focus on the effective management of closed funds
once the company has stopped selling new policies.

This timely workshop will:

• Clarify the implications of the COBS rules for financial management
• Examine challenges facing open as well as closed withprofits funds
• Help identify the expectations and risk appetite of policyholders
• Discuss methods for risk transfer
• Address challenges of the estate management and distribution

Professionals in the with-profits business from Actuarial
departments at Life Insurance firms and Friendly Societies will
benefit from this industry specific workshop.

Beyond this audience, some restrictions on attendance may
apply. If you are unsure whether this workshop is appropriate
for you please email custserv@infoline.org.uk for clarification.


Workshop Leader: Andrew Chamberlain, Watson Wyatt

WORKSHOP AGENDA

Understanding the Implications of COBS 20.2 for Financial Management Options

• The role of asset shares
• The ranges for maturity payouts
• Surrender values
• Whole of life and other classes
• Managing distributions
• Guarantee costs
• New Business
• Investment policy
• Other constraint

Developing Risk Appetites

• Policyholder expectations
• Managing policyholder risk – what is the risk appetite, and to what risks?
• Burn-through costs – what duties are owed, what are not?

Transfer of Risk

• Reassurance
• Hedging
• Risk vs. reward

Estate Management

• Expectation of distributions – managing the position
• When does an open fund estate get too small?
• Distribution in a closed fund – level, risk weighted, time weighted, tontines