Actuaries Advancing Beyond: Adrian Pask, Standard & Poor's

By Wei Zou Ang

Mr. Adrian Pask is an associate director with Standard & Poor's, one of the world's foremost provider of financial market intelligence and an integral component of the modern financial markets. After graduating from Tulane University with a Bachelor's in Mathematics and Economics, he spent his formative actuarial years with Milliman before joining Standard & Poor's as a credit analyst. Our dialogue below describes his career path and current work at Standard & Poor's.

Wei: Could you please describe Standard & Poor's.

Adrian: Standard & Poor's is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. Our independent credit ratings are forward–looking and play a very important role in the financial markets. Credit ratings are opinions about credit risk. Standard & Poor's ratings express the agency's opinion about the ability of an issuer, such as a corporation or a state or city government, to meet its financial obligations in full and on time. Credit ratings can also speak to the credit quality of an individual debt, such as a corporate or municipal bond, and the relative likelihood that the issue may default.

Wei: What are your current responsibilities at Standard & Poor's?

Adrian: I am an Associate Director on the fundamental credit ratings team covering life insurance companies. We determine an insurance company's creditworthiness through fundamental credit analysis, which includes analyzing a company's balance sheet and understanding its operating metrics, as well as the current economic, market and industry environments, to determine the likelihood of default. The appropriate rating is designated based on this analysis. We assign our highest "AAA" rating to those companies or government entities that have, in our view, an extremely strong capacity to meet their financial commitments, and this often consists of blue–chip companies or government entities. This is followed by ratings of "AA", "A", "BBB" and so on. Just like your personal credit history, the higher a company's credit rating is, the lower its cost of borrowing, which plays an especially major role for an insurance company.

As an Associate Director I have two roles at S&P: a primary analyst and a credit committee member. As a primary analyst I meet with each insurance company's senior management team, analyze the insurer's financial and business profile and present my analysis to credit committees. A credit committee is a group of senior analysts who each vote on a life insurance company's ultimate rating. As a credit committee member, I review other team members' analysis to arrive at my own view of the company's creditworthiness and then vote in the committee to determine the ultimate designated credit rating.

Wei: Could you describe your career path coming right out of college?

Adrian: I graduated from the University of Tulane with a Bachelor's in Economics and Mathematics, which provided an excellent academic base on which to build my actuarial career. My formative actuarial experience was with Milliman's life insurance practice in Hartford where I spent six and a half years consulting with life insurance companies while studying for actuarial exams. While at Milliman, I did traditional actuarial work such as pricing, valuation and demutualizations, but also did non–traditional work, such as software development, agent compensation design, and I taught classes in life insurance finance and strategy at the University of Connecticut and at the ING Business School in the Netherlands. After Milliman, I moved to Moody's Investor Services, another rating agency, where I was an associate credit analyst responsible for fundamental ratings on life insurance companies and also was involved in rating structured transactions to help manage term and UL redundant reserves, which was a new asset class at that time. Following Moody's, I had a brief stint with New York Life, which gave me a better idea of how insurance companies functioned day to day. Then I decided to make the move back into the rating agency world and joined Standard and Poor's as an Associate Director 18 months ago. I have primary analytical responsibility for companies like Guardian, Northwestern Mutual and Allstate, while maintaining involvement in the analysis and rating of structured transactions in the life insurance space.

Wei: Why did you make the switch to become a credit analyst?

Adrian: When I made the switch to become a credit analyst, I was attracted by the opportunity to view the life insurance industry from a holistic perspective and the opportunity to analyze hot topics in the insurance industry. Actuaries are typically involved in the details of pricing and valuation, but as a credit analyst, I get to place insurance companies in a broader industry context so I can better understand the forces that are shaping pricing and valuation of insurance products. Additionally, being a credit analyst was a great way for me to gain unparalleled exposure to senior level executives within insurance companies. We interact with senior level executives, usually the CEO and the CFO, to analyze a company's financial health and in the current turbulent economic environment it is not uncommon to speak with a company's senior management every week to closely monitor their ongoing activities. It is satisfying to know that my skills as an actuary and credit analyst may better help policyholder and investors understand the credit risks associated with companies that they are considering when making their financial decisions.

Wei: How has an actuarial background helped you as a credit analyst?

Adrian: The in depth understanding of insurance companies I have developed through my work experiences at both Milliman and New York Life directly relates to my current responsibilities at Standard and Poor's. I am able to better decipher an insurer's actuarial and financial operations and analyze an insurance company's creditworthiness. As one of the few FSAs in the firm, I am frequently called upon to bring my unique actuarial perspective to questions regarding insurance practices, whether it may be basic actuarial concepts or complex valuation principals. Additionally, I feel that the rigorous actuarial examination process also has helped me develop an irreplaceable actuarial intuition, as well as a discipline for working with numbers and fortitude for working with complex formulas.

Wei: Where do you see the actuarial profession moving forward?

Adrian: I hope to see more actuaries involved in educating individuals about their personal finances and long term financial planning. The current downturn has been a great example of how regular people have suffered tremendously because they didn't fully understand the risks inherent in their personal finances. With more personal responsibility falling on individuals to both fund and manage their retirements this skill set will be increasingly important in the next decade and beyond.