There has recently been some debate about the usefulness of financial economics to the actuarial profession. The consensus appears to be that the techniques are potentially valuable, but the published material is not quite ‘oven ready’. Some development work is required before the material can be applied.

The author has carried out much of the necessary development work on behalf of various clients over the last few years. On some occasions the results have conflicted with more conventional actuarial methods. The main aim of the paper is to bring the new techniques into the public domain so that they can be properly discussed by the profession, and adopted more widely if appropriate.

The paper contains a number of worked examples using techniques developed by financial economists. The author has listed the computer code which generated the examples and deposited copies on the Internet, so that others can explore the issues with a minimal development overhead.

The paper describes the application of actuarial techniques to the financial management of unit trusts and other collective investment schemes. The main features of collective investment schemes are described and the financial issues facing managers of these schemes are highlighted. The unit trust industry in particular is facing a number of potentially significant changes and the paper explores the areas in which the actuarial profession can add value to this industry.

The text of this paper, together with the abstract of the discussion held by the Faculty of Actuaries on 19 February 1996, are printed in British Actuarial Journal, 2, III, pages 623-702.

In recent years there has been increasing interest in clarifying the respective interests of shareholders and participating policyholders in the inherited estate of the proprietary life offices. This paper defines the inherited estate, considers the sources of surplus contributing to it and suggests an approach for quantifying it. Views are expressed on the attribution of the inherited estate to the parties involved with a view to a consensus emerging from a discussion of the underlying factors. The role of the supervisory authorities and of the Appointed Actuary and the independent actuary are considered and methods of accessing the inherited estate attributed to shareholders are examined.

It has been drawn to the attention of the editor that the paper by S. Haberman, ‘Actuarial review of models for describing and predicting the spread of HIV infection and AIDS’, which appeared in Journal of the Institute of Actuaries, 117, 319-405 (1990), contains significant amounts of material that had already appeared in papers by other authors in other journals.