A Few Words From Bernie

The name Actuarial Strategies & Tactics is fitting since I am an analyst at heart, an actuary who is driven to find solutions to business problems, delving into data, into regulations, staying aware of organizational constraints, and being mindful of competing objectives. My associates and I have built our careers on the development of strategies and tactics for stakeholders in our professional realm.

You can get a good idea about the kind of advisors we will be for you by first allowing me the indulgence of sketching out the arc of my professional life. From this story you will see how I developed my philosophies, honed my analytic abilities, and how both affected the organizations that I served.

When Actuarial Management Corporation, known also as AMC, was founded in 1996, I had already worked in five different actuarial shops, moving smoothly and logically from one to the other, acquiring the skills and passion that would spur me to create a unique firm. Each of those five positions is notable in that I always made a decision to work for a creative and dynamic individual, someone from whom I felt I could learn a great deal.

 

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• At Blue Cross Blue Shield of South Carolina, I reported to an accomplished consulting actuary taking a stint at a “Blues”, and I learned the basics of health insurance from him, plus the very real idea that an actuary can dramatically affect the fortunes of an insurance enterprise.

• My boss at Transamerica Reinsurance would spend time with me at the end of most days, days where I would price life insurance reinsurance and special risk quotes.  We would talk business, politics, and pricing philosophy, allowing me to see that there is never just one right answer, and that actuaries can imprint their pricing and valuation philosophies on the work that they do.

• A prominent partner at Coopers & Lybrand cajoled me in his interview to “be a group actuary,” his own career choice. He taught me about the world of public and large private sector consulting and to understand the inherent dynamics of insurance departments, government agencies, and non-profit organizations. I quickly learned the mechanics of this kind of consultative work, making several solo client calls by the end of my tenure.

• A principal at Howard Johnson & Company, a regional consulting firm, enticed me to take over a team of six recent college graduates. Boisterous, opinionated, and unorthodox, this actuary was a fervent defender of the private health care system, having clients exclusively in the world of managing general underwriters, third party administrators, reinsurers, carriers, and independent marketing organizations. He had sold his four year old consulting firm, Northwest Consulting, two years earlier to HoJo, and, unbeknownst to me then, was planning to retire in three more years. My three years together with him introduced him to the professional life I lead today. Together, we visited countless clients; I learned his craft, his analytic tendencies, the way he sought to balance the competing objectives both within and without client organizations. For the first time I became aware of the internal political machine that drives organizations, as this HoJo Board member was not shy about discussing anything. Additionally, I learned how to make the transition from a follower to a leader, delivering a highly productive work environment for my young team members, teaching skills, providing tools, even as I developed them for myself. After the principal’s retirement, and it became clear that my talents and resources ought to be brought to my most important client, Duncanson & Holt.

• The actuary and vice president at D&H, a managing general underwriter and my client of four years, hired me. I brought two staff people from HoJo and built the apparatus that we used to actuarially manage the D&H portfolio of first dollar business. For the first time, and as a Vice President, I held bottom line responsibility for a block of business, a $200 million block, dually functioning as the account manager and practicing actuary for each treaty program. I worked autonomously during my tenure, visiting New York monthly to meet with upper management, while developing a wish list of sorts, ideas about what could be done with the new emerging computer technology. By the mid 1990′s, when it became clear that D&H would be exiting the first dollar market, I then made plans to become a business owner.

Out of the chaos that lay in the wake of the D&H withdrawal, I formed AMC, seeding it with clients who were experiencing reinsurance non-renewals. D&H even hired AMC to do a few years of valuation runoff. Four principles governed our enterprise. First, we would specialize in insurance program management – no odd jobs for employers for instance. Second, we would only do custom work, specifically manufactured with the client’s own data – we had a lot of ideas we wanted to put in practice here, with new more powerful computers and algorithms. Third, we would go to our clients, physically travel to their shops so that we could understand their businesses – we were never ivory tower actuaries. Fourth, we would align our incentives with our clients – no hourly billing or out-of-pocket expense reimbursement, just fees based on growth, profit, or other objectives.

All of this worked quite well. By 2007, AMC had grown to 25 employees, looked after about 20 insurance programs, covering the full spectrum of products in the fully insured arena: small group medical, individual medical, short term medical, limited medical for groups and individuals, Davis Bacon hour bank business, student accident, ex-pat health, small group aggregate only plans, dental, and vision. We even had a couple of employer stop loss programs under management. At the time of the sale to Independence Holding Company (IHC) in that year, AMC operated with employees in five states and was pulling in top line revenue of over $4 million annually.

At AMC we introduced an analysis tool we called “Rate Adequacy,” a model that uses the client’s own data to answer the question “Is the new business written today going to produce the first year margin objective?” This tool, with the analysis engine that underlies it, our “Actuarial Seriatim Analysis” or ASA, worked fabulously. With it, we were able to keep programs profitable and growing, rarely losing another program. We also developed a proven system for actuarially managing insurance programs. Each month, we would secure granular data through our data feeds, we would reconcile that data with other known cash reporting sources, then estimate and scatter best estimate reserves and perform adjusted premium claims trend and adjustment calculations. This granular algorithmic approach allowed us to query the data for direct analytic results, over and over, in ever-changing and creative ways, instantly providing analysis and feedback, expertly informing the decision making process for the program.

The sale of AMC to IHC allowed me to capitalize on the institutional knowledge I had poured into it, while affording me the opportunity to work for a publicly traded insurance holding company, and to once again position myself for learning, this time reporting to the CEO of IHC, a famously intelligent strategic and tactical thinker. During my six year tenure, while still running AMC, as the IHC Chief Health Actuary, and later as the Fully Insured Division President, I dealt with all manner of corporate issues: Sarbannes-Oxley issues, Securities and Exchange Commission reporting, A. M. Best management, Board of Directors management, shareholders presentations, and my role on the Executive Management Team.

Actuarial Strategies & Tactics has now become a vehicle for me to pour my energy into. I bring to it, and hence to you, the totality of my professional experience, and that of my associates, the software and tools that we have developed over the years, and the perspective we have developed about insurance management, strategies, and tactics.

We look forward to meeting with you, learning more about your business needs, and showing you the analysis tools and processes that we use. AST will strive to partner with you for long term success.

 

 

 

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