In the course of an investigation I have lately made, into the rate of mortality that has prevailed among the female lives insured in the Scottish Equitable Life Assurance Society, I have tried various methods of arranging the facts furnisht by the books of the office; and I think it may be useful to persons engaged in similar investigations, if I describe these methods, and state the conclusions at which I have arrived as to the best course of procedure.

Mr. Sprague, in his report on Mr. Finlaison's Tables of Mortality among Government Life Annuitants, states as the result of his study of the subject of graduation that the most satisfactory system of adjustment is the graphic method; and he supports this opinion by referring to the irregularities which he regards as a consequence of the use of Mr. Woolhouse's method of adjustment. I do not doubt that Mr. Sprague would conceive and correctly draw a curve to satisfy all the conditions of good graduation; but in my own hands the graphic method would be a failure, and there may be others who doubt if they have skill to draw the curve and patience to amend it by the successive trials which Mr. Sprague himself finds necessary.

The method of valuation generally adopted in practice is that known as the Prospective Method; by it, the value of a policy is obtained by a consideration of the future, and is the discounted value of the payment to be made, less the discounted value of the payments (if any) to be received; discounted, that is, in each case, for both mortality and interest.

The third Lecturer to the Faculty of Actuaries is Mr Karel Van Hulle. He is a lawyer by training, and is Head of Unit at the European Commission (Directorate-General ‘Internal Market and Services’), which he joined in 1984, after having served for eight years with the Belgian Banking Commission.

He was subsequently Head of Unit for Accounting Standards, Head of Unit for Financial Reporting and Company Law and Head of Unit for Accounting and Auditing. In that capacity he was closely involved with harmonisation in the fields of accounting, auditing and company law, both at European Union level and internationally, and served as the Commission's observer with the International Accounting Standards Committee. He was Secretary of the High Level Group of Experts on Company Law, which prepared the Commission's 2003 Action Plan on Company Law.

Since November 2004 he has been Head of the Insurance and Pensions Unit. In this function, his main responsibility is the preparation of the new solvency regime for insurance and reinsurance companies (Solvency II).

This paper describes how statistical methods can be tested on computer-generated data from known models. We explore bias and percentile tests in detail, illustrating these with examples based on insurance claims and financial time series.

In this paper, we explore potential surplus modelling improvements by investigating how well the available models describe an insurance risk process. To this end, we obtain and analyse a real-life data set that is provided by an anonymous insurer. Based on our analysis, we discover that both the purchasing process and the corresponding claim process have seasonal fluctuations. Some special events, such as public holidays, also have impact on these processes. In the existing literature, the seasonality is often stressed in the claim process, while the cash inflow usually assumes simple forms. We further suggest a possible way of modelling the dependence between these two processes. A preliminary analysis of the impact of these patterns on the surplus process is also conducted. As a result, we propose a surplus process model which utilises a non-homogeneous Poisson process for premium counts and a Cox process for claim counts that reflect the specific features of the data.

This paper demonstrates how climate scenario analysis can be used for forward-looking assessment of the risks and opportunities for financial institutions, using a case study for a UK defined benefit pension scheme. It uses a top-down modelling tool developed by Ortec Finance in partnership with Cambridge Econometrics to explore the possible impacts of three plausible (not extreme) climate pathways of the scheme’s assets and liabilities. It finds that the funding risks are greater under all three climate pathways than under the climate-uninformed base scenario. In the absence of changes to the investment strategy or recovery plan, the time taken to reach full funding is increased by three to nine years. Given that most models currently used by actuaries do not make explicit adjustments for climate change, these modelled results suggest it is quite likely that pension schemes are systematically underestimating the funding risks they face.

Sir Andrew Herrick Rowell died on 27 August 1973 in his 84th year. To members of the Institute one tribute overshadows all the rest. He was our Centenary President. It was in June 1948 that the bonds of friendship and affection, so strong among actuaries the world over, but which had been so hard to sustain in the preceding years of war and its aftermath, were gloriously restored with the Centenary Assembly of the Institute of Actuaries in London at which Andrew Rowell, newly knighted by His Majesty, presided so memorably. To his contemporaries the Centenary Assembly was a time for old friends and new resolves. To one young actuary, not yet fully qualified, and he cannot have been alone, it was the kindling of a flame of love of and pride in his profession which still burns brightly today.

Over the course of the 20th century Ireland moved from being a largely young population with a high death rate from infectious diseases to an increasingly older population with a consequent rise in chronic diseases. Understanding the changes that occurred in Irish mortality over the 20th century and how these changes compare with those experienced by similar countries can help us plan for the challenges of our aging population. This paper analyses trends in mortality in Ireland over the period 1901 to 2006 by age group, gender and five broad categories of cause of death – infectious diseases, circulatory diseases, respiratory diseases, cancer and external causes. To place the changes in an international context the trends are compared with those experienced by Northern Ireland and England and Wales. Ireland experienced the fastest improvements in mortality of the three regions in the early years of the 21st century. By 2006 the mortality of Irish males ranked between that of Northern Ireland and England and Wales while Irish females experienced the lowest mortality of the three regions. The improvement in Irish mortality in the 21st century can be attributed mainly to the drop in deaths from circulatory diseases for both males and females.

This paper introduces and demonstrates the use of quantum computers for asset–liability management (ALM). A summary of historical and current practices in ALM used by actuaries is given showing how the challenges have previously been met. We give an insight into what ALM may be like in the immediate future demonstrating how quantum computers can be used for ALM. A quantum algorithm for optimising ALM calculations is presented and tested using a quantum computer. We conclude that the discovery of the strange world of quantum mechanics has the potential to create investment management efficiencies. This in turn may lead to lower capital requirements for shareholders and lower premiums and higher insured retirement incomes for policyholders.

This abstract relates to the following paper:

DempsterM.A.H. & MedovaE.A.Asset liability management for individual households ‐ Abstract of the London Discussion. British Actuarial Journal, doi:10.1017/S135732171100016X

A Report with the above title, which forms Section B of this paper, was presented at the conference at Hythe, Kent in September 1977 of the General Insurance Study Group, which is sponsored jointly by the Institute and the Faculty. The conference was attended by about sixty people, nearly all non-life practitioners and nearly all actuaries.

Previous papers on technical reserves had discussed various statistical methods of estimating outstanding claim reserves, and in some cases had included some data to provide numerical examples of the use of the methods. In our report we chose to start with some data and to look at the degree of stability in those data. Inspection of the data showed remarkably stable patterns and it was apparent that a simple method not previously described based on average payments was likely to be satisfactory for estimating the reserve for outstanding claims. The report then seeks to explain why the authors consider that this method has advantages over two well-known but more complicated methods.