One of the most interesting developments of the last decade has been the advance in micro-computer technology, and the actuary has taken full advantage. The advent of the mainframe computer heralded the use of a whole range of techniques which had previously been impractical because of the lengthy calculations involved; it is, however, the convenience and flexibility of the micro-computer that has brought some of these techniques to life. As a result the micro-computer has become an indispensable tool for a wide variety of actuarial work. In no area of actuarial practice has the impact of the micro been more noticeable than in that of profit testing. It is profit tests and their applications that are the subject of this paper.

In the discussion on Smart's paper (J.I.A., 104, 125) it was suggested that, for all its general excellence, it did not make the subject of profit testing readily accessible to the student. One of my aims in writing this paper has been to present the subject in a more practical form. In an attempt to make the paper readily comprehensible many aspects have been simplified, which I consider to be necessary if the principles are to be expounded clearly and are not to be clouded by unnecessary detail.