Television and books are filled with police thrillers, medical dramas and legal thrillers, but surprisingly, I’ve never seen an actuarial thriller. I wondered why this is the case. I also wondered what an actuarial thriller would look like…
Eric Malone stood in Pat Goldstein, the chief actuary’s, office.
“Ten points?! What do you mean the loss ratio is up 10 points?!” Pat’s faced turned bright red as he pounded his fist on the wall.
Malone sat down on Pat’s desk. “Hey, I don’t make the numbers, chief.”
“That’s it!” Pat pointed a big finger at Malone’s chest. “I’m through with you, Malone. I want your pencil and your calculator on my desk, now!”
Malone looked Pat in the eye. “It’s not a mistake, chief. Loss emergence is through the roof this quarter.”
“Is that so?” Pat sat down and stared at his computer thoughtfully. “I want you to get to the bottom of this, Malone. Track down what caused this. And don’t rest until you find it.”
Malone stood upright. His 5-foot-6-inch frame towered over Pat’s desk. “You can count on me.”
“Oh, and Malone.”
“Yeah, chief.”
“I’ll be watching you. You screw this one up and you’ll be back to scrubbing rate change data until you retire!”
Malone turned abruptly and exited the chief actuary’s office thinking over his next move.
Malone thought about the problem before him. Nothing was making sense like the LDFs in the first duration of a long-tailed line triangle. He needed some help. He thought of Sammy Chen. He was still taking his exams and the material would still be fresh in his mind. Malone walked up a flight of stairs and into an empty office where Sammy was studying.
“Hey, Sammy. How’s tricks?”
“Not great, Malone. Kid was up half the night. All of this studying with no sleep.” Sammy looked back down at the study materials and started drifting off to sleep.
“I’ll be watching you. You screw this one up and you’ll be back to scrubbing rate change data until you retire!”
Malone shook him. “Stay with me, Sammy!”
Sammy opened his eyes. He looked terrible. “Too much studying.”
“Listen to me, Sammy!” Malone put his hand on Sammy’s shoulder. “You got to tell me. How can I analyze and present results at a very fine level of detail. Concentrate Sammy!”
“You need to use creda… creda…” Sammy started drifting off to sleep again.
“Darn it, Sammy! Stay with me.” Malone shook him. “Somebody get this man some coffee!” But it was too late. Sammy was fast asleep. Malone thought it over. What could Sammy have meant?
Malone was back at his desk thinking. His search felt futile like performing a rate study on a runoff book. His phone rang.
“This Malone?” a scratchy voice said into the phone.
“Listen, I’m not looking to make a switch now.”
“I’m not a headhunter, I have some info. I may be able to help you with the reserve numbers.”
“Who is this?” Malone shouted into the phone.
“Never mind that. Meet me at the actuarial bar on 8th in five minutes.”
“How do I know this isn’t a trap?”
“What do you have to lose? The numbers are due in under an hour.”
Malone heard a click and the phone went silent. He ran out of his cube over to the elevator bank and punched the button. He waited a couple of minutes and pressed the button again. Finally, a door opened, but the car was going up. He waited a couple more minutes. Eventually, another car arrived going down. He got out at the lobby and ran down to 8th where the actuarial bar stood on the corner and went in.
Malone looked around. The bar was filled with a shady cast of characters. There were actuaries studying while listening to loud music and while watching sports games. There were also some who were not even studying, reviewing papers not even on the syllabus.
Malone signaled to the bartender. “I’ll have a whiskey and a BA-II Plus.”
A short man walked across the bar to where Malone was standing. “Hey, you interested in some photocopied TIA notes? Real cheap.”
“Get lost, punk,” Malone told him as the short man scurried away.
Malone signaled to the bartender. “I’ll have a whiskey and a BA-II Plus.”
The man sitting next to him spoke while looking down at his TI-87. From his choice of calculators, Malone could tell that this man didn’t belong here. “Don’t look over. I can help you.”
“Talk,” said Malone.
“We started writing some more business in California a couple of years ago. We knew it was a bad idea, but we couldn’t resist it. It looks like it’s finally catching up with us.”
“Why you telling me this?”
“Let’s just say bonuses weren’t too great this year.” The man turned off his TI-87 and turned to leave the bar. “You never saw me.”
Malone was retelling the story to his wife, a lawyer, that night. “Wow, my job is so boring,” she said. “I should have become an actuary.”
Uri Korn, FCAS, is an AVP, actuary R&D for Axis Insurance in New York City. He is eagerly awaiting the call from AMC, HBO and NBC.
