The strict analogy which exists between these two classes of annuities has doubtless received the consideration of the majority of students, but I am not aware that it has ever in print had that attention which it deserves; and at any rate our usual text books hardly even refer to it. Although it is shown, in the short but suggestive article of the late Prof. De Morgan (vol. iv, p. 277), in the most general way, that years, or periods of time, may be interchanged with any other kind of status whatsoever, whether certain or contingent; yet, as successive statuses are almost exclusively spoken of, the less complex cases are liable to escape notice. Under these circumstances, the following brief notes may not be thought superfluous.

This abstract relates to the following paper:

SweetingP. and FotiouF.Calculating and communicating tail association and the risk of extreme loss ‐ Abstract of the London DiscussionBritish Actuarial Journal, doi:10.1017/S1357321712000347

This paper reviews the market structure of the U.K. with-profits life insurance market and the potential effect on how life insurers operate. We consider the competitiveness of the market, quantifying the increase in the degree of concentration since 2000, and establishing that inherited estates may offer some protection from competition for incumbent firms. However, there is a significant degree of mobility in market positions of leading firms. Analysis of costs indicates some large differences between firms, with larger firms experiencing lower cost ratios, indicative of economies of scale. There are some marked differences in insurers' prices, the data showing that charges tend to be lower on unit-linked than on with-profits policies. The paper suggests that while there are potential concerns about how the market operates for consumers, the impact is limited by the dramatic reduction in new with-profits business.

Critical illness (CI) insurance involves cover that pays out on the diagnosis of an illness which is deemed to be critical. Estimation and graduation of CI insurance claim rates has been challenging, partly because of the diagnosis of the insured event often being unclear or not recorded. This introduces additional uncertainties in the evaluation of claim rates. In this work, which was funded by an Institute and Faculty of Actuaries research grant, we have addressed the issue of model and parameter uncertainty in claim rate estimation, when the date of diagnosis is missing, aiming at obtaining graduated rates that can be applied to estimate the future cash flow of CI policies and determine insurers’ liability more accurately. Better understanding of uncertainty in rate graduation and pricing is important for insurers, not least because of future changes in the interpretation of the “definition” of an illness or advances in medical practice leading to more efficient diagnosis and treatment.

Estimation of claim rates was addressed in this project using a parametric Poisson model for the number of claims, which accounts for claims that have not been settled by the end of the observation. This was achieved by considering probabilities of the distribution of the delay period between diagnosis of insured illness and settlement of the corresponding claim. We have developed appropriate generalised-linear-type models (including lognormal, Burr, generalised gamma and generalised beta) to investigate this delay, using data supplied by the Continuous Mortality Investigation (1999–2005). The analysis includes various claim risk factors (e.g. gender, benefit amount, policy duration and so on) and was performed under a Bayesian framework, using Markov chain Monte Carlo estimation techniques.

Based on this experience, our analysis suggests that estimates of the claim delay distribution are model sensitive, but claim rates and pricing are not. Under the best claim delay distribution fitting, the following risk factors are considered important for predictive purposes: policy duration, selling office, benefit type, benefit amount, policy type and cause of claim.

Operational Risk is one of the most difficult risks to model. It is a large and diverse category covering anything from cyber losses to mis-selling fines; and from processing errors to HR issues. Data is usually lacking, particularly for low frequency, high impact losses, and consequently there can be a heavy reliance on expert judgement. This paper seeks to help actuaries and other risk professionals tasked with the challenge of validating models of operational risks. It covers the loss distribution and scenario-based approaches most commonly used to model operational risks, as well as Bayesian Networks. It aims to give a comprehensive yet practical guide to how one may validate each of these and provide assurance that the model is appropriate for a firm’s operational risk profile.

This abstract relates to the following paper: IFoA/LLMA (2014) Longevity Basis Risk. A methodology for assessing basis risk by Cass Business School and Hymans Robertson LLP. Available at http://www.actuaries.org.uk/sites/all/files/IFoA%20LLMA%20Longevity%20Basis%20Risk%20Report_0.pdf

This paper describes how to calculate approximate prices of options if investment markets are being modelled according to the Wilkie investment model.

This abstract relates to the following interim paper: Kenny, T., Golding, C., Craske, G., Dobinson, A., Gunter, S., Griffiths, O., Hayes, N., Mockridge, A., Robertson, S., Saundh, R. and Thorpe, J., Actuarial management of equity release mortgages: current practice and issues in the actuarial management of ERMs in the UK. This paper is available on the Institute and Faculty of Actuaries (IFoA) website at https://ifoa-www.s3.eu-west-2.amazonaws.com/live/s3fs-public/Sessional%20Paper_0.pdf. The final paper will be published in due course.

The Government Actuary's Department (GAD) came into being in 1919, originally arising from the perceived importance of applying actuarial skills to the financing of the United Kingdom social security system. Whilst the GAD has changed considerably over the years, and now operates as a publicly owned consulting firm, social security and related policy and regulatory advice remain at the core of the Government Actuary's role. This paper explores the nature of the role of the GAD in the social security area, and provides examples of the scope of GAD reports on the long-term finances of the National Insurance Fund. A brief description is given of some of the other areas of GAD's work.

The corporate landscape of United Kingdom financial services has changed considerably in the last fifteen years with virtually all the main players now shareholder-owned. The dominance of shareholder ownership may not last for ever and the pendulum could swing back to alternate structures. Should the actuarial profession look ahead and consider what, if anything, could be done to encourage diversity? This paper considers some of the issues involved and raises some questions for the profession to discuss.

This abstract relates to the following paper:

HitchcoxA.N., KlumpesP.J.M., McGaugheyK.W., SmithA.D. & TavernerN.H.ERM for insurance companies – adding the investor's point of view ‐ Abstract of the London Discussion. British Actuarial Journal, doi:10.1017/S1357321711000122