Papers and reports

The relationship between price and value is thus complex. This paper proposes a “refined
actuarial” approach to valuation: whereas the actuary should make appropriate use of the
information available from market prices, it is also appropriate to consider the price/value
differentials which may exist in any specific situation, and allow for these in deriving a
helpful measure of value. In some cases, it may be appropriate to use assumptions more
closely related to the market. In other cases, making adjustments to current market prices may
be appropriate.

This paper is concerned with the development and operation of Continuing Care Retirement Communities (CCRCs). The paper examins the financial structure of a CCRC, being developed by the Joseph Rowntree Housing Trust, and describes a population model utilising transition probabilities to project care needs and financial performance.
The paper then explores the possibility of commercial organisations becoming involved in this market, and examines the risks that such a venture would entail and the strategies that may be adopted to reduce these risks.

Actuaries have become increasingly involved in general insurance and in particular in the London Market. This paper examines the management of the pricing process in the context of the London Market, and deals with concepts such as profit testing, risk and reward, and setting underwriting targets. The key area covered is the communication of a strategy in a meaningful way that can be controlled at the operating level.

Report of the Annuity Guarantees Working Party

The ageing population represents a major change for most of the Western world over the next fifty years or so. The change is not only demographic, but social and financial as well. We have the enormous advantage however that the change can be seen coming from a long way off, and will not burst on us suddenly and unexpectedly. There is therefore little excuse for not preparing for it.

This section introduces some of the main building blocks for claims reserving. To begin with, there is the important idea of making a projection of past experience into the future. Since the future never takes the trouble to conform properly with the past, any projection whatsoever will be subject to error. One needs, therefore, to understand the principles which can lessen the likely degree of error, and so bring credibility to the work.

If we lived in a world where nature and human activity were well behaved and gave no cause for upset or surprise, then claims reserving would be a simple matter scarcely requiring the services of the expert. One would need to assess the values of at most three quantities for each class of business: a) the exposure to risk, b) the frequency of claim, and c) the average loss per claim. Past and present trends for these factors could be assumed to hold equally in the future, and the known patterns could be projected forward with confidence.