Mary Hardy


Mary HardyContact Information:
Mary Hardy

Research interests

Professor Hardy's research interests cover aspects of solvency and risk management for both life insurance and pension plans. The major recent focus has been in financial risk management, at the interface of actuarial science and financial engineering. She also works on the econometrics of risk management, especially for actuaries, for whom long-term horizons and deep out-of-the-money risks provide different challenges to the usual risks of banking.

Insurers began inserting financial guarantees into contracts as a means of competing with mutual funds and other investment media for stewardship of their customers' savings. Financial guarantees do not lend themselves to traditional actuarial methods, which rely on diversification to reduce risk. Two paradigms have evolved for managing such risks, the actuarial method and the financial engineering approach. In several papers, Professor Hardy developed comparisons of the two methods and considered the econometric issues related to projecting the assets underlying the guarantees. Her work has addressed variable annuities, segregated funds, guaranteed annuity options, and equity-indexed annuities.

Once the distribution of future losses has been modelled, risk measures convert the distribution to a real value for pricing or capital requirements. Professor Hardy has been involved in both the single period and the multi-period risk measure problem.

An area of current challenge for actuaries, governments, individuals and employers is the problem of designing sustainable pension solutions for employees. Professor Hardy is interested in funding and risk management of hybrid schemes, which combine the best features of the defined benefit and defined contribution systems, in a way that treats employees fairly between and across generations, and that shares risks between employees and the plan sponsor in a way that is appropriate and sustainable through different economic conditions.


Professor Hardy is a Fellow of the Society of Actuaries (SOA) and of the Institute of Actuaries, and is a Chartered Enterprise Risk Analyst. She is a frequent speaker at SOA meetings, and is involved in the SOA education system, on the Education Executive committee, and as a trainer of education volunteers. Her research in applied risk management has led to several industry oriented project. In particular, she was a member of the task force of the Canadian Institute of Actuaries (CIA) charged with developing a methodology for capital requirements for segregated fund guarantees.

Professor Hardy is the editor of North American Actuarial Journal and is associate editor of ASTIN Bulletin and Insurance: Mathematics and Economics. She was previously editor of Annals of Actuarial Science.

Mary Hardy develops methods for managing risk; adapting financial mathematical techniques to the particular problems of insurance companies. In today’s global economy, diversification and new investment opportunities have changed the way risk affects investment and insurance strategies. Insurance companies need to have viable, sustainable action plans and contingencies in place for low-risk, high-loss eventualities.

Two of Mary’s books have been adopted by the CIA and the SOA as a textbook for professional exams. Actuarial Mathematics for Life Contingent Risk, co-authored by David Dickson and Howard Waters, is the designated text for the MLC exams starting in 2012. Investment Guarantees: Modelling and Risk Management for Equity Linked Life Insurance is a required text for students specialising in individual life insurance. Helping student and professional actuaries apply new models to manage risk, contracts, and the economical capital required to meet liabilities is part of Mary's work.

Professor Hardy was elected to the Board of Governors for the SOA in 2004 and was elected vice-president for 2007-2009. This position allowed her to influence policy, stewardship and ensure the quality of training and resources. "Actuaries have a huge responsibility for ensuring that insurance and pension payments are there when they are needed. The Society of Actuaries is responsible for credentialing. That, in turn, places the SOA leadership in a critical role in determining standards for risk management education." says Mary. "It’s very gratifying to make a difference."

Selected publications

  • Wirch J.L. and Hardy M.R. (1999) A synthesis of risk measures for capital adequacy. Insurance: Mathematics and Economics. 25 337-347. December 1999.
  • Ji, M., Hardy, M.R. and Li, J.S-H. (2012) A Semi-Markov Multiple State Model for Reverse Mortgage Terminations. Annals of Actuarial Science (forthcoming).
  • Marshall, C., Hardy, M.R, and Saunders D. (2010) Valuation of a Guaranteed Minimum Income Benefit. North American Actuarial Journal 14(1) 40-58.
  • Li J.S-H., Hardy M.R. and Tan K.S. (2010)  Pricing and Hedging the No-Negative-Equity-Guarantee in Equity Release Mechanisms. Journal of Risk and Insurance 77(2) 499-522.
  • Dickson, D.C.M., Hardy, M.R. and Waters H.R. (2009) Actuarial Mathematics for Life Contingent Risk. Cambridge University Press.
  • Chen K. and Hardy M. R. (2009)  The DB underpin hybrid pension plan: fair valuation and funding. North American Actuarial Journal 13(4) 407-424.
  • Kim J.H.T. and Hardy M.R. (2009) A capital allocation  based on a solvency exchange option. Insurance, Mathematics and Economics 44(3) 357-366.
  • Hardy M.R. (2001) A regime switching model of long term stock returns. North American Actuarial Journal 5.2 41-53.
  • Hardy M.R. (2003) Investment Guarantees: Modelling and Risk Management for Equity-Linked Life Insurance  Wiley (New York).
  • Boyle P.P. and Hardy M.R. (1997) Two approaches to reserving for maturity guarantees. Insurance: Mathematics and Economics, 21, 113-127
University of Waterloo
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