The Presidential Address relates events which occurred during significant years in the life of the President with matters relevant to the Institute, past, present and still to come, and with what was written by previous Presidents. It considers actuarial education, and specially its links with universities, and then comments on the President's career as a life actuary.

The role of the Appointed Actuary is discussed, and also what an actuary is and does. The international actuarial perspective is covered through a description of the Groupe Consultatif and of the President's other international involvement, especially with Africa. Other subjects covered include with-profits contracts, the dispersion of actuaries throughout England and Wales, the role of the actuary in today's changing world, the relationship between the Institute and the Faculty, and the role of the President. Finally, the President looks forward to what actuaries might be and do in the future.

I now report on my period as President and give my thoughts on the issues which face the profession. But first I would like to call on my friend John Finlaison to remind us of what he said in opening the inaugural discussion of the Institute of Actuaries in 1848:

This paper explores an approach to assessing the adequacy of capital resources for non-life insurance companies. It examines the range of risks faced by these companies and the factors that influence the analysis of their impact on an organisation's financial condition. The paper considers how the actuarial profession may contribute to this process, with particular reference to the regulatory regime envisaged in the United Kingdom.

This second paper from the Compliance/Peer Review Working Party of the Professional Affairs Board sets out the reasons for introducing peer review within the profession, and outlines the areas of professional difficulty identified. The main recommendation is that peer review by an actuary's colleagues in his firm should be carried out on all relevant work before presentation to the client (whether an internal or external client). The situations in which this practice would be mandatory are also set out and, initially, these will relate to mandatory guidance in practising certificate areas.

This paper extends the concept of investment efficiency from investment management structures to include strategic asset allocation and liability related issues. The concept of risk budgeting is developed. It represents a valuable way of incorporating risk and return information to produce more efficient investment decisions. Information ratio is a key measurement in the process, and it is concluded that the risk budget should be allocated based upon the marginal contribution to it for different sources of risk. Non-financial risk is also considered in terms of both governance and risk.

The text of the paper The Concept of Investment Efficiency and its Application to Investment Structures, by T. M. Hodgson, S. J. Breban, C. L. Ford, M. P. Streatfield and R. C. Urwin, together with the abstract of he discussion on it held by the Institute of Actuaries on 28 February 2000, are printed in British Actuarial Journal, 6, III, pages 451-545.

At the meeting of the Faculty of Actuaries on 19 February 2001, both papers, The Concept of Investment Efficiency and its Application to nvestment Structures and Risk Budgeting in Pension Investment, were discussed.

This Presidential Address is a call to arms for the profession. It outlines many areas in which we could be major contributors if we are prepared to undertake the necessary research, discussion and seminar work. In covering the historical landscape of actuarial work, emphasis is placed on looking to the future in life assurance, pensions and investment. Education, public interest and marketing are all covered in the context of what we need to do and the need to get it done sooner rather than later. Our future, and that of the Faculty, is again opened up for debate to ensure that we remain objectively focussed.

With-profits business has flourished for over a century as a means of providing access to equity-type investment whilst smoothing the volatility risk. Today's world demands greater transparency, and with-profits has come under increasing criticism in this regard. The Working Party concludes that it remains good value as an investment vehicle and suggests how its transparency can be significantly improved.

The paper first analyses the characteristics of with-profits, which it notes has been permitted for stakeholder pensions. It then analyses the various criticisms of with-profits and considers how they can be rebutted without destroying its essential nature, pre-supposing the implementation of the Association of British Insurers' (ABI) Raising Standards scheme.

The paper concludes that greater transparency is both necessary for rebuttal and also achievable without destroying the with-profits concept, to this end proposing a model for the internal analysis of identified classes of with-profits business and the inclusion of specified additional information in the statutory returns to the regulators. It also proposes that policyholders be given slightly more information than is specified under Raising Standards. Finally the paper analyses the implications for the life assurance industry, which it considers acceptable.

The paper explores the framework for the development of actuarial education in the future. The main aims are to broaden the profession while maintaining standards and to achieve global qualifications by working with other actuarial bodies. The suggested way forward would mean several changes from existing practice.

In this paper, we identify the economic system in which occupational pension schemes operate. This system includes all parties to the pension arrangement, particularly the members of the scheme and the shareholders of the sponsoring company. This requires us to model the pension scheme not as a self-contained fund, but simultaneously alongside the company, and to recognise its interaction with other parties with financial interests in the scheme. Under this method, the stakes of the various parties aggregate to 100% of the assets of the company including the assets of the pension scheme. The power of this approach is that decisions taken in relation to the management of the pension scheme can be assessed by the effect they have on the way in which the overall economic value of the company is divided between stakeholders.