Sense and Nonsense About the Single European Currency

The project to introduce a single currency is the most daring step so far in European integration. Indeed, it can be correctly described as revolutionary. It is much more far-reaching than previous moves in this direction over the last 15 years, such as the harmonisation of regulations or the ending of exchange controls; it is intended not as an incremental advance, but as a complete transformation of Europe's financial arrangements.The audacity of the single currency project is the more striking, in that it is a “revolution from above” rather than a “revolution from below”. The driving force has not been popular dissatisfaction with the existing currency arrangements, but the integrationist ambition of certain members of the European élite, particularly the German Chancellor, the French President and the President of the European Commission. (The integrationist ambition appears to attach to the positions ex officio and to be quite unaffected by the particular individuals who currently fill them.) These members of the élite emphasize the political nature of the single currency project, not the economic benefits. For example, Chancellor Kohl has said that European economic and monetary union (EMU) should prevent future wars in Europe.

Monetary Union: A Desperate Gamble

Dr Tim Bunch (President, Manchester Actuarial Society): Good afternoon, ladies and gentlemen. Welcome to Manchester Town Hall for this special meeting of the Manchester Actuarial Society, which is being held to commemorate the 150th anniversary of the actuarial profession in the UK.I should like to welcome particularly various guests. There are guests invited by the Manchester Actuarial Society, and also guests of actuarial firms in the north of England. I would particularly like to welcome Paul Thornton, the current President of the Institute.Our speaker today is Professor Patrick Minford, who is Professor of Economics at Cardiff Business School, which is at the University of Wales. He has been in that position since October 1997. Prior to that, he was Professor of Economics at Liverpool University, and he maintains his contacts with the University of Liverpool through being Director of the Liverpool research group in macro-economics. He has held economic positions in a number of places, including HM Treasury, at Manchester University and at the National Institute for Economic and Social Research.

Common Sense and the Euro

Paul Seymour (Chairman, SIAS): Can I start this evening by welcoming everybody to this Jubilee Lecture. As I think most of you will know, it is the first in a series that we have laid on at the Staple Inn Actuarial Society for the 150th Anniversary of the profession and we are delighted, as you might imagine, to have Lord Hurd–Douglas Hurd–to start us off in this March lecture. We've got as a guest here Tim Congdon who is going to be speaking in Bristol. I am hoping to get Patrick Minford to speak in Liverpool and we are still trying to get a speaker for Edinburgh. So we have this series going as part of the Staple Inn Actuarial Society's contribution to our 150th Anniversary celebrations. Another part of it, by the way–and I will use this opportunity to plug it–is that we are having a May Ball on 9 May, and I am sure people should mark that date in their diaries because that is another important thing we are doing for the 150th.

Europe: A Partnership or a Problem?

Dr D C Bowie (President, FASS): Good evening, ladies and gentlemen. On behalf of the Faculty of Actuaries Students' Society, I am delighted to welcome you all here this evening. As you are probably aware, this lecture forms part of the celebrations of the 150th anniversary of the actuarial profession in the United Kingdom, and that is something of which we are all very proud.The Students' Society itself is of course much younger than that, having been established only in 1920, but I suspect that there are a lot of students who cannot envisage a profession without students, without examinations, and it just seems too idyllic a world really to imagine a profession that did not have students doing battle with those examinations. So I am sure that the Students' Society has been around at least as long–certainly in spirit.

PHI Reserving

Papers devoted to the subject of reserving for Permanent Health Insurance (PHI) are not exactly numerous. The author could not find one published in the U.K., although there were papers in the U.S.A., Australia and South Africa.Most U.K. PHI papers have sought to cover the topic in its entirety and therefore do give views on reserving issues. Ironically, this paper in seeking to focus on reserving did, incidentally, find itself wandering over a large part of the PHI actuarial countryside. Perhaps this is unavoidable.PHI reserving is not just a question of ensuring adequate solvency. The reserving basis we choose can aid or hinder our understanding of the business. After all, the recognition of profits is defined by the reserving basis. If management is going to track profits in order to assist decisions on marketing position, financial strength of the office, etc. then it needs to be concerned that the reserving basis is not distorting the emerging results. An equivalent argument can be put forward in respect of the capital requirements of the business.

AIDS and the Actuary

Throughout this century we have become accustomed to regular improvement in mortality rates at most ages. For life office actuaries this trend could be regarded as a potential source of profit for assurance business, but as a possible source of loss for annuities. However, since the movements in mortality were gradual then mortality rates at any given time could be estimated with a fair degree of confidence.In this relatively stable environment, there was little concern over the first report of a death caused by complete and unaccountable failure of the immune system in the United States of America in 1981. When the number of such deaths began to grow and to migrate to Europe than actuaries had to take notice. Here was a disease (called AIDS) which was causing deaths at an alarmingly increasing rate and which medical science seemed powerless to counter. Concern grew about the effect which a major increase in mortality rates caused by AIDS would have on the financial health of life offices.