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The Actuary The magazine of the Institute & Faculty of Actuaries

The Greatest British Actuary ever® – the dénouement

We are now down to a quartet of actuaries who are vying for the honour of being the Greatest British Actuary Ever. It is of some regret to me that two of my favourites, Gordon Pepper (for prescience) and Alan Ford, currently enjoying a renaissance courtesy of the recent Wilkie paper (for setting the gold standard for financial management), did not make the shortlist; and the absence of Geoffrey Heywood means that no builder of consultancy practice is on this list. Still, it is hard to squeeze seven into four.

The time has come for all readers to cast their votes. There will be a winner, and not voting simply deprives your preferred candidate of your vote. Remember Florida in the last US presidential elections and how Dubya got elected? How many Democrats must be ruing their not having bothered to vote and indirectly contributing to the war in Iraq? I am not the brother of any of the candidates and I cannot count votes that have not been cast.

The candidates are William Morgan, William Thomas Thomson, Frank Redington, and Andrew D Smith. Ask yourself which candidate has made the most significant contribution to:

  • the advancement or synthesis of actuarial knowledge or practice;
  • the enhancement of the status of the profession in the eyes of his employer, or his clients, or society at large; or
  • the widening of the scope of the profession by taking it into new fields.
  • To save you from having to find back numbers of The Actuary I give below a brief case for each of the four.Your votes should come to me (not my secretary, who has left me) at iiqbal@deloitte.co.uk or Deloitte, Horizon House, 28 Upper High Street, Epsom KT17 4RS.

    William Morgan is generally regarded as the founder of scientific life assurance. It was his guidance, spanning four decades, that set the foundation for Equitable’s two centuries of fame. Scientific premium rates, caution in distributing surplus, the invention of reversionary bonuses, the introduction of the control cycle as we know it today: all these can be credited to him. To borrow Ranji’s description of WG Grace, he changed a single-stringed instrument into a many-chorded lyre. He synthesised and advanced knowledge. Without him there might have been fewer mutuals and even more corporate failures.

    William Thomas Thomson guided Standard Life, then a stock company, through the turbulent middle four decades of the 19th century when insurance company failures were commonplace. In many ways he was the precursor of Mark Weinberg. His claim to greatness lay not in originality of thought but in the rarer quality of being able to sift through other people’s ideas and adapting, and adapting well, those that suited his company. He oversaw expansion overseas and into new asset classes. He was a founder member of the Faculty and of the Institute.

    Frank Redington’s genius is widely recognised by actuaries who qualified between 1930 and 1980. More recently some people have suggested that his ideas on immunisation were flawed, in that they implied guaranteed arbitrage profits. That opinion is misguided. A survey of 30s and 40s literature (see, for example, Tom Suttie’s paper of 1942) will show what a breakthrough was his idea of looking at assets and liabilities on a consistent basis, and the suggestion that duration matching of assets to liabilities would minimise adverse effects of interest rate fluctuations. Even mainframes did not exist then, never mind powerful PCs, so abstruse mathematics would have been out of place. His 1952 paper warned of the dangers of financial options on either side of the balance sheet. He practised what he preached: Prudential was probably the company with the smallest GAO problem.

    His most durable contribution is the financial prosperity of Prudential. He saw it through the 40s to the end of the 60s, from low interest rates to inflation, and prospered by adapting products as well as surplus distribution. He left behind a legacy of actuarial standards, and successors seeped in them: the Prudential did not miss him in the following three decades, because he had bequeathed continuity of thinking. His Flock and Sheep Essays warned the industry and the profession of the dangers of not weaning people off high bonus expectations. If only we had listened.

    Finally we come to Andrew D Smith, the man who failed the Tebbit test in the recent England v Georgia rugby match. His principal contribution is that of alerting the profession of the need to subject the asset side of the balance sheet to the analytic rigour usually devoted to liabilities. What is more, he has given us a coherent methodology. He also has the forceful personality – a Paul rather than a Jesus – to browbeat apathetic people into taking notice. He may turn out to be a saviour of the profession as far as jobs are concerned, now that the industry has less use for our skills in liability analysis.

    Andrew has a strong following. I suppose the key question is whether he has done enough to merit the top accolade or whether his career must be allowed to unfold, perhaps for another decade. I do not offer a view as it is for each voter to judge.

    To see a full picture version of this article, see the PDF of the people news.