Chennai: He didnt know the spelling or meaning of the word actuary when he graduated. Today, the soft-spoken and at times jovial K S Gopalakrishnan, 39, who is the chief actuary of Birla Sun Life, is one of the few young actuaries shuttling between jobs and cities at a fast pace.
In a short span of time, he switched three employers: Life Insurance Corporation of India (LIC), Global Trust Bank (GTB) and ICICI, before settling down at Birla Sun Life Insurance as its chief actuary.
He may be still young, but he has gathered good experience in all spheres of the life insurance business - drawing up start-up plans, designing and pricing a product and preparing a valuation report. He had also applied the life insurance techniques of embedded values and earned profits for an asset management company (AMC), whose name he refuses to divulge.
It was an interesting exercise - trying to apply this technique to an AMC - for a couple of reasons. Firstly, the average tenure of a mutual fund holding is much shorter than a life insurance policy. Secondly, there is a difficulty in estimating redemption of units by unit-holders. In life insurance, the exits, such as lapses and mortality, are by and large stable, can be estimated reasonably well and can be modelled, he says.
Spending two years at Birla Sun Life, where he launched products that were entirely different from the others in the market, Gopalakrishnan is again taking off - this time to Hong Kong. No, he is not quitting the job; he is deputed to Sun Life Financial, Hong Kong. A year later he will move to Canada, where Sun Life is headquartered, before returning to India.
Professionally, this is going to be a rewarding exercise for him. After a 13-year stint at LIC (1984-1997), where he had handled activities like underwriting and actuarial and software development, Gopalakrishnan spent his entire time in life insurance start-ups, developing business plans, designing products and pricing them. The Sun Life assignment focuses on working in different corporate actuarial areas like Canadian statutory valuation, embedded value, dynamic capital adequacy testing and expense analysis for various product lines, he says.
Now I have the opportunity to move to corporate actuarial. For instance, valuing a unit-linked product that has several options and riders calls for professional judgment on materiality of certain benefits and assumptions, and arriving at margins for adverse deviations, he says, almost making one flabbergasted with the technical nuances of actuarial science. And this is the same person who doesnt have any qualms in admitting that he hadnt heard of the word actuary till 1982.
I was then studying for final-year graduation, and was wondering about the future course of action when an uncle suggested the actuarial course. I was disappointed at the definition of an actuary in the then Oxford dictionary. It gave me an impression that an actuary is a clerk doing premium calculations, he smiles.
Born into an educated south Indian middle-class family as the eldest of the four siblings, (his father K G Sankaranaryanan is a graduate and mother Padma a matriculate), Gopalakrishnan spent most of his childhood away from Chennai, due to his fathers transferable job at accountants general office.
We returned to Chennai when I was in the tenth standard and joined Ramakrishna Mission School, he says. Like most actuarial professionals, mathematics was Gopalakrishnans favourite subject and he scored good marks; the same cannot be said to be true in respect of other subjects.
My mother says I was promoted straight to the third standard from the first standard. I dont know why. Probably the second standard teacher did not want to see my face or I did something exceptionally good or bad in the first standard. My father was a bit realistic about me. He had his own doubts whether I would get through the school final public exams. When the results were declared in the newspapers he bought two different newspapers to check this out, he chuckles.
Scoring less than 90 per cent in the pre-university course, Gopalakrishnan had to forget medicine and engineering courses and had to settle down for a bachelors degree at Vivekananda College. Here again, he continued his fanatic love for mathematics. Opting to major in mathematics, he chose numerical mathematics and mathematical statistics as ancillaries to remain in the floor where the mathematics department was located. Realising that education is the only passport to riches in life he started taking studies seriously and the university mark-sheets started reflecting his resolve.
At this juncture LIC advertised for recruiting actuarial apprentices, and Gopalakrishnan made his first move towards the actuarial profession by applying for the post. But the recruitment got caught in union tangles and he decided to try other number-crunching professional courses like chartered and cost-accountancy. But the voluminous tax laws to be studied forced him to decide that an accounting profession is not his cup of tea.
LIC, in the meantime, recruited Gopalakrishnan as an actuarial apprentice and posted him at it New Delhi zonal office. With tears in his eyes and hope in his heart one fine morning Gopalakrishnan boarded the Tamil Nadu Express to start his actuarial career. But disappointment awaited him at the workplace. The zonal office was just collecting the data from various branches and passing it on to it central office in Mumbai.
The actuarial department had nothing to do with actuary except that few staffers were pursuing actuarial examinations. It was like Mysore bonda (a south Indian snack) and Mysore (the south Indian city), he says. So he enrolled with the UK actuarial institute and went on to complete the first stage of the actuarial course in three years - the first in his batch of actuarial apprentices.
Then he became an assistant administrative officer. In 1990, to procure more actuarial experience, he decided to pack off to LICs central office in Mumbai - the actuarial hub of the life insurance giant. In the same year he married Ganga, an MPhil in history, a university topper.
My wife is a curious person: she knows what an actuary is but she hates maths. In a way, this makes our life even more interesting, as I calculate the monthly dues to the milkman and she keeps the family (myself and our two kids, Karthik and Deepa) awake post-lunch, telling stories from the history lessons she learned, he says.
Though efforts to clear the actuarial exams slackened a bit, promotions came on time: in 1992 (as administrative officer) and in 1996 (as assistant secretary/assistant actuary). The environment at the Mumbai office was satisfying. The first challenge was to redesign the entire valuation process of collecting individual policy records from branches, validate the policy data and reconcile the same. The next step was to develop software to value these policies.
Between 1994 and 1996 he could analyse data on mortality investigations on various parameters like gender, region and duration. And there were other software development projects like the programme for employees pension scheme, pricing of products with multiple decrements and cash-flow models for pricing. He is a competent professional and a perfectionist who never said no to any work, certifies former LIC executive director (actuarial) R Ramakrishnan, Gopalakrishnans ex-boss.
In the meantime, due to Gangas prodding and the realisation that the market is all set to open up, Gopalakrishnan shrugged off his lethargy to become a fellow of Actuarial Society of India (ASI) and Institute of Actuaries, UK. I should have completed the course after finishing the first stage, he regrets. My advice to aspiring students is to pass the exams within six years, acquire practical skills by working in an actuarial department, and improve verbal and written communication skills to express ideas sans less jargon.
In 1997 he made his major move by quitting LIC to join GTB, then toying with an insurance venture. A year later he was lapped up by ICICI as vice president to work for the companys life insurance joint venture with Prudential Corporation. The three things I look at in any job opportunity are: a) the opportunity to learn and contribute; b) the money compensation; c) whether it is fun working for the company and does it give enough room for a family life.
With liberalisation in the Indian insurance sector getting delayed, Prudential Corporation deputed him to Vietnam to work out a business plan where it was starting a life insurance venture. The challenges were manifold. There is no stock market, no medium- or long-term bonds, a weak banking system and people there either invested in gold or US dollars (though not legal) or simply kept the money under the pillow. There are no credible mortality or morbidity studies, he says.
Soon he was picked up by Birla Sun Life. From an apprentice assistant to the chief actuary (a notch below the coveted position of appointed actuary), Gopalakrishnan feels that he has finally arrived. At a time when all the new entrants were busy launching the traditional life insurance products, Birla Sun Lifes actuarial team decided to come with unique products. Sun Life sells Universal Life in Canada and we took that concept to India, though we modified it to meet local requirements.
Comparing the work environment in LIC and that of private players, he says the contrasts are striking. LIC is strong in systems and procedures, which ensure smooth functioning. With its huge database LIC is a delight for a research-minded actuary. Private insurance companies now are very different because shareholders expectations have to be met. On the financial front, new product designs mean more complexities in valuation of liabilities. And risk management has become another key area of control, he says.
The one professional regret Gopalakrishnan has is the turbulence at ASI during his tenure as its secretary and as an executive committee member. The famous actuary Redington once said: An actuary who is only an actuary is not an actuary. I firmly believe in that maxim, he says when queried about his interest in ASI activities.
He stood for election in 1998 and got elected as honorary secretary. Probably that was the first time when young blood was infused into ASI. The specific things he wanted to do at ASI were: separating the overlap between any organisation and running it as an independent professional body, bringing out the professions magazine regularly and putting it under an autonomous editorial team.
Little did I realise that implementing each one of these would cause so much of heartburn and upset relationships between old friends. Hence, I decided to quit the secretary post in mid-1999, he says. Further, in the 2001 elections, some like-minded actuaries got defeated and he decided to relinquish all his official positions at ASI. But he does not rule out his participation in the future elections at ASI, so that he can contribute his mite for the professions development in India.
And in the future? I am not particularly fascinated with the appointed actuary position at this juncture. I am willing to wait and take it as it comes along, says Gopalakrishnan.