Analysis

One definition of what actuaries do is "to make financial sense of the future". They are trained in combining the disciplines of statistics, economics and mathematics to solve practical financial problems. These skills can complement the skills set available to professionals and management practising in fields outside of the usual scope of actuarial involvement:

The services that we offer are summarised below.
 - STATISTICAL SUPPORT
 - RETIREMENT VILLAGE FINANCIAL SOUNDNESS
 - VALUATIONS OF BUSINESS ENTITIES AND SHARE OPTION TRUSTS
 - VARIOUS CONSULTING PROJECTS
 

STATISTICAL SUPPORT

Research projects are conducted by teams of specialists in a particular field or topic of research, at great expense, and these teams often lack timeous and adequately-involved statistical support.

Since 2001 ARCH has been applying its statistical know-how and technical skills towards the design, analysis, reporting and journal publication of research data gathered by the broader scientific community, particularly in the field of public health research.

Our services include:

     • Consulting at the initial stages of research proposals and planning, mainly on        sampling methodology and target sample size
     • Primary and secondary analysis of research data
     • Assisting with the presentation of findings
     • Assisting with the preparation of research reports and co-authoring of papers for        publication in scientific journals

We regularly consult to researchers from the Medical Research Council, and our clients also include the National Department of Health, several smaller research organisations, and also students at various post-graduate levels preparing dissertations.

Our primary client collaborates with leading international academia and researchers, and the members of ARCH have periodically traveled abroad to attend seminars and lectures, such as the University of Michigan’s 2007 Summer Session in Epidemiology, which dealt with sophisticated statistical techniques being applied in health research.

ARCH uses a range of statistical packages, including SPSS, Epi-info, SUDAAN and SAS.
 

RETIREMENT VILLAGE FINANCIAL SOUNDNESS

Residents usually enter a retirement village under a Life Rights system. This entitles them and their partner to reside there for life. On exit from the village the original purchase price is returned to the resident or to their estate. In some villages the resident/estate will also get a share of the resale profit. In this financial structure residents' monthly levies are generally subsidised in lieu of the resale profits that are forfeited at exit. The levies will usually increase annually, but these increases may be limited to a fixed percentage or to a maximum term.

Actuaries can assist by ensuring that the design and financial structure of the Life Right policy is financially sound. They do this by considering the demographic profile of the village, and the expected changes to it over time, in conjunction with the projected cash flows (expenses, levy income and resale profits). In so doing actuaries can answer the following kinds of questions:

     • if levies escalate at no more than 5% per annum for no more than 5 years will the        stabilisation fund meet its annual expenses in the long term?
     • if the board wishes to now return 25% of the resale profits to the member/estate        on exit, are the current levies sufficient to sustain village profits in the long-term?
     • a developer would like to know the financial impact of returning 80% of the        sale price on exit as opposed to 25% of the resale profits?

VALUATIONS OF BUSINESS ENTITIES AND SHARE OPTION TRUSTS

The ability to assess multiple risks and to project and value future cash flows are key parts of the actuary’s tool set, and actuaries are therefore well placed to perform valuations of business entities and share option trusts.

These core actuarial skills are complemented at ARCH by one of our members having successfully completed all three examinations required for the CFA (Chartered Financial Analysis) qualification.

VARIOUS CONSULTING PROJECTS

ARCH has applied the actuarial and financial know-how of its members and associates to a range of diverse consulting projects, including:

     • Investment performance analysis – computing periodical performance measures        for fund administrators
     • Independent appraisal of proposed insurance vehicles for licensing existing and        planned insurance offerings (e.g. cell-phone insurance offered by a leading        clothing retailer)