In his Presidential Address, Dr Hare talks about the theme for his presidency, ensuring that the profession is relevant in the current environment. He outlines some of the recent changes in the economic environment and the financial services industry. He then sets out each element of the profession’s strategy and discusses elements that he intends to champion during his Presidency to ensure that it remains relevant. He concludes by stating the profession’s vision.

Assessing longevity risk is crucial to the financial management of annuities and longevity-related financial instruments. Actuaries have been using socio-economic circumstances (SEC) of individuals estimated through postcodes, pension size and occupation to price annuities for prospective customers. Differences in mortality rates of people in different SEC have been discussed extensively but less is known about how their mortality rates have changed over time.

A lack of regular, consistent and credible mortality data for people in different SEC has hampered the study of historical mortality trends. This in turn has made forecasting a greater challenge. To address some of these data issues, we have obtained mortality and population data between 1981 and 2007 for England, divided into SEC quintiles (measured by the relative deprivation of the area of residence according to the Index of Multiple Deprivation (IMD) 2007). Using the data, we have analysed the mortality trends by SEC. These findings can provide insight into mortality improvement for people in different SEC. This can contribute to commercial decisions for annuity businesses, reinsurance and longevity swaps.

This abstract relates to the following paper:

LuJ. L. C., WongW. and BajekalM.Mortality Improvement by Socio-Economic Circumstances in England (1982 to 2006) ‐ Abstract of the London discussionBritish Actuarial Journal, doi:10.1017/S1357321712000359

This Working Paper should not be reported as representing the views of the IMF.

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

In today's financial system, complex financial institutions are connected through an opaque network of financial exposures. These connections contribute to financial deepening and greater savings allocation efficiency, but are also unstable channels of contagion. Basel III and Solvency II should improve the stability of these connections, but could have unintended consequences for cost of capital, funding patterns, interconnectedness, and risk migration.

This paper is a report from the Extreme Events Working Party. The paper considers some of the difficulties in calculating capital buffers to cover potential losses. This paper considers the reasons why a purely mechanical approach to calculating capital buffers may bot be possible or justified. A range of tools and techniques is presented to help address some of the difficulties identified.

This abstract relates to the following paper:

Al-DarwishA., HafemanM., ImpavidoG., KempM. and O'MalleyP.Possible unintended consequences of Basel III and Solvency II ‐ Abstract of the Edinburgh discussionBritish Actuarial Journal, doi:10.1017/S1357321713000391

This paper looks at alternative long-term care (LTC) funding models and options. It analyses six global models and the potential applications to the UK. The paper provides a demographic overview for each of the six countries to illustrate the increasing global demand for LTC and the funding thereof which is becoming a global critical issue. It examines the approaches each country has taken to address the funding issue with varying degrees of public/private co-operation and partnerships. The authors hope that the lessons learned from these other markets will assist the UK as they try to come to grips with their growing social care funding issue.

This abstract relates to the following paper: FranklandR.EshunS.HewittL.JakhriaP.JarvisS.RoweA.SmithA.D.SharpA.C.SharpeJ. and WilkinsTDifficult risks and capital models: a report from the Extreme Events Working Party ‐ Abstract of the Edinburgh Discussion. British Actuarial Journal, doi: 10.1017/S1357321713000524

This abstract relates to the following paper:

ElliottS., GoldsS., SissonsI. and WilsonH.Long-term care – a review of global funding models ‐ Abstract of the London discussionBritish Actuarial Journal, doi:10.1017/S1357321713000329

Longevity risk faced by annuity portfolios and defined-benefit pension schemes is typically long-term, i.e. the risk is of an adverse trend which unfolds over a long period of time. However, there are circumstances when it is useful to know by how much expectations of future mortality rates might change over a single year. Such an approach lies at the heart of the one-year, value-at-risk view of reserves, and also for the pending Solvency II regime for insurers in the European Union. This paper describes a framework for determining how much a longevity liability might change based on new information over the course of one year. It is a general framework and can accommodate a wide choice of stochastic projection models, thus allowing the user to explore the importance of model risk. A further benefit of the framework is that it also provides a robustness test for projection models, which is useful in selecting an internal model for management purposes.

This abstract relates to the following paper:

RichardsS. J., CurrieI. D. and RitchieG. P.A Value-at-Risk framework for longevity trend risk ‐ Abstract of the Edinburgh discussionBritish Actuarial Journal, doi:10.1017/S1357321712000342

This paper investigates incentives and disincentives for risk reporting practices by global insurance companies. We examine various arguments for and against risk reporting, whether voluntary or compliance in nature. An important issue is whether reporting is dominated by shareholder, regulatory or managerial incentives. We evaluate whether current reporting practices are consistent with either political visibility, cultural effects or idiosyncratic managerial incentives. Our empirical analysis is based on (1) a content analysis of disclosures contained in annual reports of a sample of European, Asian and US global top 25 insurers between 2006 and 2012 and (2) a survey of internal business reporting practices. We re-characterise a disclosure index from prior research to examine the relation between the extent of risk disclosure and various managerial, agency and other characteristics. We predict that the extent and nature of risk disclosures depends on cultural imperatives and managerial incentives.

This abstract relates to the following paper:

RichardsS. J., CurrieI. D. and RitchieG. P.A Value-at-Risk framework for longevity trend risk ‐ Abstract of the London discussionBritish Actuarial Journal, doi:10.1017/S1357321712000451

This abstract relates to the following paper: KlumpesP., KumarA. and DubeyR.Investigating risk reporting practices in the global insurance industry ‐ Abstract of the London Discussion. British Actuarial Journal, doi: 10.1017/S1357321714000087