Institute Of Actuaries Research Articles

Future Financial Regulation: An Actuary's View. A Discussion Paper by a Working Party

The text of this paper, together with the abstract of the discussion held by the Institute of Actuaries on 22 September 1997, are printed in British Actuarial Journal, 4, II, 145-191.

Human Genetics and Financial Services. A Discussion Meeting with Supporting Papers

The text of these papers, together with the abstract of the discussion held by the Institute of Actuaries on 19 May 1997, are printed in British Actuarial Journal, 3, V, 969-1058.

Notes for a Discussion on the European Single Currency. Abstract of the Discussion held by the Faculty of Actuaries

The text of this paper, together with the abstract of the discussion held by the Institute of Actuaries on 25 November 1996, are printed in British Actuarial Journal, 3, II, 227-319.

Notes for a Discussion on the European Single Currency

ABSTRACTThis paper forms notes for discussions about the European single currency at the Institute of Actuaries and the Faculty of Actuaries. The author assumes (and hopes) that the single currency will start on time in 1999, with most of the Member States of the European Union included. The key dates are 1 January 1999, when the exchange rates between currencies will become irrevocably locked and become conversion rates, and 2002, when euro notes and coins will be introduced, and the retail banking sector will convert to euros. The advantages of a single currency are potentially very great; the costs are also considerable. Governments of Member States will no longer be able to get a competitive advantage by devaluing their currency, or be able to choose an inflation rate that is different from that of the E.U. as a whole. The key document is the Maastricht Treaty, and the conversion criteria included therein are discussed. The author concludes that, if governments choose to interpret the criteria leniently, all countries, except possibly Greece, will be included in 1999, with Greece joining a year or two later. Some of the practical considerations for actuaries, including life insurance, general insurance, pensions, banking and investment are mentioned. The paper is not comprehensive, and is a personal contribution to stimulate discussion.

Ownership of the Inherited Estate (The Orphan Estate)

The text of this paper, together with the abstract of the discussion held by the Institute of Actuaries on 24 June 1996, are printed in British Actuarial Journal, 2, V, pages 1273-1322.

Annual General Meeting of the Institute of Actuaries

Annual General Meeting of the Institute of Actuaries

Address by the President of the Institute of Actuaries: For Goodness Sake

ABSTRACTThe Presidential Address argues that, by acting in the public interest, the power of actuaries to benefit individuals financially can become a competitive advantage for the profession. This theme is explored by reference to professionalism being under threat, the negative impact of professional negligence claims, the need for unity in the profession, nationally and internationally, and the consequences for our education. The future of the profession will be brighter, and can be expansionist, if actuaries are recognised and valued for serving the public interest in the wider fields, but this will require effective public relations.

Apology

It has been drawn to the attention of the editor that the paper by S. Haberman, ‘Actuarial review of models for describing and predicting the spread of HIV infection and AIDS’, which appeared in Journal of the Institute of Actuaries, 117, 319-405 (1990), contains significant amounts of material that had already appeared in papers by other authors in other journals.

Asset Shares and Their Use in the Financial Management of a With-Profits Fund

The text of this paper, together with the abstract of the discussion held by the Institute of Actuaries on 27 February 1995, are printed in British Actuarial Journal, 1, IV, pages 603-688.

Annual General Meeting of the Institute of Actuaries

Annual General Meeting of the Institute of Actuaries

Address by the President of the Institute of Actuaries: Turning Promises into Reality

ABSTRACTThe Presidential Address gives a broad overview of the development of the actuarial profession's role in its principle areas of activity. Actuaries play important roles in life insurance and pensions, but there are some major new challenges facing the profession in these areas. General insurance has been slow to develop, but is now likely to be the fastest growing part of the profession with a steadily expanding role. Finance and investment also offer major fields where actuaries could be more influential. With continuing growth expected in the number of qualified actuaries, it will also be important to move into wider fields. The new President challenges the profession to give proper priority to the public interest and to ensure that actuaries are worthy of the trust which is placed in them.

Life insurance company takeovers. A Report by a Working Party of the Life Assurance Joint Committee of the Institute of Actuaries and the Faculty of Actuaries, 15 October 1993

AbstractThe working party was required to establish what actuarial information is needed by the financial world for the proper evaluation of a bid for a quoted insurance company, and, in the light of these findings, to consider what may be required in the way of guidance to actuaries. The report considers the issuesw hich occur when life insurance companies aresu bject to takeovers and to other changes of ownership. The Takeover Code has many implications in such situations and these are discussed fully, particularly any conflicts of interest and the independence or otherwise of the actuaries involved. The interests of policyholders are considered and advice is proffered to actuaries. A Guidance Note is being issued.

Strategy for the 1990s. Document prepared by The Planning Joint Committee of the Institute of Actuaries and the Faculty of Actuaries (Chairman, Mr C. D. Daykin) and Approved by Both Councils

ABSTRACTThe Institute of Actuaries and the Faculty of Actuaries have embarked on a joint planning exercise with a view to developing a more proactive profession, by focusing the attention and energy of members and ensuring effective use of scarce financial and human resources. ‘Strategy for the 1990s’ sets the overall framework of key objectives, which were agreed by a historic joint meeting of the Councils of the Institute and the Faculty on 4 March 1991.

Report of the Joint Working Party on Discrimination in Insurance and Pensions.

The Working Party was set up by the Institute of Actuaries' Research Committee. Subsequently the Faculty of Actuaries nominated J. P. Batting as a member, and M. C. Corbould of the International Department of the Association of British Insurers was invited to join the Working Party in view of his extensive involvement with the European insurance associations and relevant Common Market Directives.

The Measurement of Investment Risk.

1.1 In the paper “Improving the Performance of Equity Portfolios” by Clarkson and Plymen (presented to the Institute of Actuaries on 25th April 1988) the authors concluded that Modem Portfolio Theory methods made no contribution whatever to improving the performance of equity portfolios and suggested that attention should be paid instead to the application of fundamental analysis, which—if carried out by skilled and experienced analysts—should lead to higher expected returns. The only practical application of techniques related to Modem Portfolio Theory appeared to be in the area of Index Funds, where it is desired to track the performance of a chosen index as closely as possible.

The Financial Management of a With-Profit Long-Term Fund—Some Questions of Disclosure.

1.1. There are three starting points for this paper. The first is Marshall Field's challenging Presidential Address to the Institute of Actuaries in 1986 on the subject of “Risk and Expectation”. The second is the example, still fresh in our minds, of a medium-sized mutual life office which overstretched itself and found it necessary to merge with a competitor. The third is the impending requirement, stemming from the Financial Services Act 1986, to give an investment client, including the holder or prospective holder of an insurance savings contract, what is described as “best advice”.

The Actuary In Damages Cases—Expert Witness or Court Astrologer?.

This paper takes its title from the recent judgment of the Court of Appeal inAuty and Others v National Coal Board (1984). Lord Justice Oliver stated that, “as a method of providing a reliable guide to individual behaviour patterns or to future economic and political events, the predictions of an actuary could be only a little more likely to be accurate (and would almost certainly be less entertaining) than those of an astrologer”.The above statement was referred to by Stewart Lyon, immediate past President of the Institute of Actuaries, in his review of the Session 1983–84 at the Institute's Annual General Meeting in June 1984. Although the quoted passage had received all the publicity, he was more concerned with the judgment in the same case given by Lord Justice Waller who erroneously stated that the expectation of life was an average and assumed that everybody lived to that age and then died. Mr Lyon concluded his remarks on the subject by stating that the Appeal Court's handling of the Auty case raised the general question of whether the actuarial profession needs to adopt a more active approach to public relations.

THE RATE OF RETURN AS A MEASURE OF PERFORMANCE

Papers by Wyatt (Wyatt, 1984) and Hall (Hall, 1985) have addressed the subject of property performance measurement in this journal, and the topicality of the subject has been ensured by the response to Hager and Lord's paper to the Institute of Actuaries (see Editorial, Journal of Valuation, 3: and Brown, 1985). However, the measure employed has not been the subject of detailed analysis, and at various times the time weighted rate of return, the money weighted rate of return, the internal rate of return and others have been suggested as the appropriate measure. It is not even clear whether MWRR and IRR are identical measures. This paper examines alternative measures and demonstrates the difference between MWRR and IRR and makes recommendations of the correct measure.

Pensions: The problems of today and tomorrow. A summary of the Report published by the Institute of Actuaries and of the discussion at Staple Inn on 11 June 1985

From the very outset of the formation of pensions schemes in the United Kingdom, actuaries have been involved in their design, investment, valuation and solvency. A review of issues of the Journal of the Institute of Actuaries in England and the Transactions of the Faculty of Actuaries in Scotland over the last 40 years would show how schemes have become more complicated and more comprehensive, how the economic and equity problems have increased and how the actuarial profession has successfully adapted its theory and practice to accommodate change. After World War II the rapid growth in occupational pension schemes together with the post-Beveridge expansion in State social security led to concerns about the overall effect on the national economy. As a consequence, in 1954 a report on “The growth of pension rights and their impact on the national economy” was presented to both the Institute and the Faculty of Actuaries by Bernard Benjamin, Francis Bacon and Donald Elphinstone.

The road to Windsor: Centenary of the Royal Charter of 1884

Royal Charters incorporating academic and professional bodies have usually been granted as soon as the organization could prove itself worthy of the honour. Why, then did it take the Institute nearly 40 years to acquire its charter? The story has been told in R.C. Simmonds's The Institute of Actuaries 1848–1948 but bears retelling here.