Legal risk management for actuaries involves recognizing that different types of assignments have different levels of risk. One of the highest levels of risk comes when an actuary's work is part of public securities filings.
An illustration of this played out with Tower Insurance Group last week. After the close of trading on Wednesday, August 7, Tower Insurance Group announced it would not make its quarterly filings on time because of loss reserve issues. During the day on August 8, Tower announced that it was engaging an outside actuarial firm to assist it with review of adverse loss reserve development. By the end of that day, class action law firms had issued press releases announcing that they were commencing investigations on behalf of investors into potential violations of securities laws.
I have no reason to believe there were any violations of securities laws nor any issues surrounding actuarial estimates of Tower's loss reserves. I doubt the class action law firms do either. But any time you see a publicly traded insurance company's stock drop because of reserve charges, the threat of securities law suits looms.
The risk management tip for actuaries is to take care that your name is not mentioned in securities filings or press releases of publicly traded companies. When the investing public does not know your name, the sharks will have a much harder time turning you into a target or a defendant.
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