Independent reviewing actuary support for external auditors

Insurance liabilities are often one of the largest and most judgemental items within an insurer’s financial statements. Audit firms require access to actuarial expertise to provide assurance over these liabilities and challenge management where appropriate.

Our client needed independent actuarial support to:

• Assess whether reserves were appropriate for financial reporting purposes.
• Review the assumptions and methodologies used to calculate the reserves.
• Challenge key areas of judgement and identify any areas requiring further investigation
• Provide an independent opinion to support the audit process and conclusions
• Communicate complex actuarial matters clearly to audit teams, management and those charged with governance.

Providing this assurance requires a combination of deep technical actuarial expertise, practical audit experience and the ability to apply professional judgement in areas of uncertainty.

We worked closely with the audit team while maintaining our independence as reviewing actuaries. Our objective was to provide a robust assessment of the reasonableness of the insurer’s booked reserves and the actuarial work underpinning them.

Our review process included:

• Detailed assessment of actuarial reports, models and supporting calculations prepared by the insurer.
• Review and challenge of key reserving assumptions, methodologies and management judgements.
• Assessment of compliance with relevant accounting and regulatory requirements.
• Reconciliation of reserves to actuarial estimates and financial statements.
• Discussions with management and other stakeholders to understand the rationale behind key decisions.
• Producing a reviewing actuaries report in accordance with actuarial professional standards.

Broadstone provided independent actuarial assurance to support the external audit of the insurer’s technical provisions and insurance liabilities. We reviewed actuarial models, assumptions and methodologies, challenged key areas of judgement, and assessed the reasonableness of the reserves and compliance with relevant accounting and regulatory requirements. Key deliverables included:

• Independent actuarial review reports tailored to the audit team’s requirements.
• Robust challenge and assessment of reserving assumptions, methodologies and management judgements.
• Clear documentation of findings, recommendations and conclusions.
• Identification of opportunities to enhance reserving and governance processes.
• Independent opinions supporting the appropriateness of the insurance liabilities and related actuarial calculations.

Our review enabled the audit team to obtain specialist actuarial assurance on a flexible basis, helping them assess material insurance liabilities, challenge management appropriately and complete the audit with confidence, without the need for an in-house actuarial function.