Actuaries Smarter Than I-Bankers?

I'm hardly going to try to get into that debate, but a recent article from The Economist touches on that matter to some degree. Very briefly, it goes into the fact that through this sub-prime mess, insurance companies have stood up to the problems markedly better than banks. And interestingly enough, the insurance company that has gotten hit the hardest (AIG), is one that has been taking on more and more "bank-like" practices.

Why have insurance companies been better at avoiding this mess? Well, the sole function of actuaries is to avoid risk, so when an enormous risk is realized, it's really no surprise that actuaries are better able to handle it. One particularly relevant quote from the article:

...in banks different teams often track different risks, masking potentially catastrophic correlations between them. Smart insurers are increasingly aware of the way in which life, property, business interruption and other risks interact—a portfolio risk-management approach encouraged by both regulators and investors.

Anyways, if there's any article I'd encourage you guys to read, it's definitely this one, as it shows that what I'll be doing next year is actually kind of cool and worthwhile.

Next Year's Model?