The Actuarial Association of Europe (AAE) and its members will this Friday review a subscriptions proposal from the Institute and Faculty of Actuaries (IFoA), rejection of which the latter has said would likely see it withdrawing from the association and entering into a memorandum of understanding, if the AAE were willing.

The Institute’s proposal is for a change to the AAE’s statutes to introduce a cap – of 5,500 – on the number of members upon which annual subscriptions are based.

According to a late May letter from the IFoA to the AAE that was seen by IPE, if the IFoA’s proposal were not approved, “a likely consequence” would be the IFoA withdrawing from the AAE and entering into a research and thought leadership memorandum of understanding with it, although this was not the IFoA’s preferred approach.

Signed by Grahame Stott, chair of the IFoA management board, the letter also reveals the IFoA had not paid its full subscriptions to the AAE for 2020/21, with the Institute saying it wanted to hear from the AAE about its proposals before making any payment.

However, the IFoA said it recognised that all organisations were facing cash flow difficulties, and that it was therefore “happy” to pay one twelfth of its subscription each month for the six months from June if the AAE formally requested it to do so.

At the same time, Stott wrote that “I would respectfully ask that given the current discussions” any interest charge payable for late contributions be waived.

According to the letter, the IFoA’s proposal would see it paying an annual subscription of €110,000.

“This would have the benefit of better aligning the level of contribution the IFoA pays to the concerns of the IFoA senior volunteers as to the perceived value of membership and would not require a major rewrite of the AAE statues at this time,” Stott wrote.

“It also has the benefit of giving time for the UK’s currently uncertain future relationship with the EU to be determined,” he added.

According to the IFoA’s letter, Brexit meant that the IFoA’s ability to play a leadership role “interacting with EU institutions” was limited.

MRA problem

The letter also mentions that, “due to a legal challenge in the UK”, the IFoA would be unable to participate in a mutual recognition agreement (MRA).

MRAs are arrangements by which the IFoA and other actuarial bodies recognise each other’s professional qualifications.

Last year the IFoA launched a new curriculum and, according to its website, following the curriculum’s introduction all MRAs other than that with the AAE are temporarily suspended.

According to Stott’s letter, the IFoA’s proposal was that it continued to be a full member of the AAE, “but recognising that in certain areas we would inevitably take more of a back seat”.

Stott wrote that this was “not to say we would oppose the core principles underlying the AAE, but, just like many other AAE members, our focus would be particularly strong in one area, i.e. we do wish to continue with the valued level of engagement in research and thought leadership with the other European actuarial bodies, through the AAE”.

“The IFoA confirm that they would like to stay as a full member of the AAE”

Falco Valkenburg, AAE chairperson 

Asked about the contents of the IFoA letter, Falco Valkenburg, AAE chairperson, told IPE: “The vision of the AAE is for actuaries throughout Europe to be recognised as the leading quantitative professional advisers in financial services, risk management and social protection, contributing to the well-being of society, and for European institutions to recognise the valuable role that the AAE plays as a leading source of advice on actuarial and related issues.

“The AAE will continue on this road,” he said. “The IFoA, as a founding member, have been strong partners in formulating our vision. The IFoA confirm that they would like to stay as a full member of the AAE.”

According to an agenda document for Friday’s extraordinary meeting, the meeting will include the IFoA explaining its proposal and providing background, with the AAE board then to present its point of view and representatives of the member associations to have an opportunity to react to the IFoA proposal and ask questions.

The subsequent agenda item is to agree a clear mandate for the AAE board in further discussions with the IFoA.

In response to a request for confirmation and further questions from IPE, a spokesperson for the IFoA said: “The IFoA can confirm that for some time we have been in discussions with the AAE about the implications of the UK’s exit from the EU for the IFoA’s future relationship with the AAE. Until the outcome of those discussions with the AAE is reached, it would not be appropriate for us to comment further.”

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