WebEx Conference on 2006 Ballot Propositions July 17, 2006 Steve D’Arcy, Chairman of the CAS Board Paul Braithwaite, CAS President

Governance Initiatives on 2006 Ballot Board proactively considers governance issues by allotting time during Board meetings for discussion. Board proactively considers governance issues by allotting time during Board meetings for discussion. Formed Board Task Force on Outside Representation in CAS Governance Process in March Formed Board Task Force on Outside Representation in CAS Governance Process in March Charged with considering the role of outside representation in the CAS governance process. Charged with considering the role of outside representation in the CAS governance process.

Governance Initiatives on 2006 Ballot Recommendations Appointed Board Members Appointed Board Members Create a class of Board Members consisting of up to three additional Board Members to be appointed by the Board. Create a class of Board Members consisting of up to three additional Board Members to be appointed by the Board. These appointments can include non actuaries. These appointments can include non actuaries. Executive Director as Member of Executive Council Executive Director as Member of Executive Council

The Board’s Position – New Class of Board Members (1) New Environment for Boards New Environment for Boards Sarbanes Oxley Act Sarbanes Oxley Act Penrose Report and Morris Review of Profession Penrose Report and Morris Review of Profession Increased responsibility for Board Increased responsibility for Board May need expertise beyond those elected May need expertise beyond those elected Better Decision-Making Better Decision-Making Broader input Broader input Change in dynamics of Board Change in dynamics of Board Move away from inward thinking Move away from inward thinking Focus on key issues Focus on key issues

The Board’s Position – New Class of Board Members (2) Perception Perception Change reflects prevailing opinion on governance Change reflects prevailing opinion on governance Positions CAS as outward looking and forward thinking Positions CAS as outward looking and forward thinking Other actuarial organizations have been forced to involve non-actuaries in governance Other actuarial organizations have been forced to involve non-actuaries in governance Act Now Act Now Current system is not broken Current system is not broken If it does break, another group may take over to fix it If it does break, another group may take over to fix it Intention of Board to Add Intention of Board to Add VP Casualty Practice Council VP Casualty Practice Council One non actuary One non actuary

The Board’s Position – Executive Director on Executive Council The Constitution established the membership of the Executive Council when we did not have an Executive Director (chief staff executive) The Constitution established the membership of the Executive Council when we did not have an Executive Director (chief staff executive) The change reflects our new organizational structure The change reflects our new organizational structure Needed to attract and retain qualified candidates Needed to attract and retain qualified candidates

ACAS Rights on 2006 Ballot Historical Perspective on ACAS: Since 1914, two classes of membership. Since 1914, two classes of membership. Associate & Fellow designations have changed over the years: Associate & Fellow designations have changed over the years: Were initially based on company responsibilities. Were initially based on company responsibilities. Fellows: Department heads. Fellows: Department heads. Associates: Actuaries who worked within departments. Associates: Actuaries who worked within departments. Exams were instituted in 1915: Exams were instituted in 1915: Number and content of exams has varied over time. Number and content of exams has varied over time. Currently a two-exam educational difference. Currently a two-exam educational difference.

ACAS Rights on 2006 Ballot That the unrestricted right to vote be given to members either upon attainment of Fellowship or five years after attainment of Associateship, whichever should occur first. That the unrestricted right to vote be given to members either upon attainment of Fellowship or five years after attainment of Associateship, whichever should occur first. That all Associates who have been members for at least five years can stand for election to the Board of Directors, with no change in the current size of the Board. That all Associates who have been members for at least five years can stand for election to the Board of Directors, with no change in the current size of the Board. That all Associates who have been members for at least five years could hold all officer positions with the exception of President, President-Elect and Vice President - Admissions. That all Associates who have been members for at least five years could hold all officer positions with the exception of President, President-Elect and Vice President - Admissions.

The Board’s Considerations – ACAS Rights Voting rights unchanged since 1914; reflect a time when there was a greater difference between classes. Voting rights unchanged since 1914; reflect a time when there was a greater difference between classes. Associates are an important part of the Society: Associates are an important part of the Society: Many Associates contribute extensively to the profession as volunteers, on committees, as speakers and authors, etc. Many Associates contribute extensively to the profession as volunteers, on committees, as speakers and authors, etc. Associates have equal practice rights. Associates have equal practice rights. Associates cannot vote even though they pay dues. Associates cannot vote even though they pay dues. Many associates are suggested for positions on the preferential ballot each year, but not eligible to serve. Many associates are suggested for positions on the preferential ballot each year, but not eligible to serve. 31% of Associates no longer take exams. 31% of Associates no longer take exams. Ought an ACAS have the same rights as a CAS member by Mutual Recognition? Ought an ACAS have the same rights as a CAS member by Mutual Recognition?

Conclusion The Board recommends that Fellows vote in favor of the proposed changes to the Constitution and Bylaws. The Board recommends that Fellows vote in favor of the proposed changes to the Constitution and Bylaws. Please take the time to learn about these important issues on the 2006 ballot. Please take the time to learn about these important issues on the 2006 ballot. “Meet the Issues” section of the CAS Web Site. “Meet the Issues” section of the CAS Web Site. Special elections publication to be mailed with August issue of the Actuarial Review. Special elections publication to be mailed with August issue of the Actuarial Review. Discuss the issues with other members. Discuss the issues with other members. Vote on the proposals. Vote on the proposals. Balloting takes place August 1-September 1. Balloting takes place August 1-September 1.

Question and Answer Session

Thank You!