1.1. The most significant development in the last decade so far as participating life assurance in the U.K. is concerned has been the increasing proportion of the funds invested in equity investments, i.e. ordinary shares and property, and the marked rising trend in the income from such investments associated with an even greater overall rise in their market values although there have of course been periods during which market values have fallen substantially. The fact that overall there has been a much greater rise in market values (as measured in the case of ordinary shares by Stock Exchange prices) than in dividends reflects the change from the situation up to 1959 when the dividend/price ratio of ordinary shares was greater than the yield on long term gilt-edged securities, the difference being regarded as a risk premium to cover the possibility of the current level of dividends not being maintained. Since that time the position has been reversed, the dividend/price ratio being less than the long term gilt-edged yield; this difference, known as the ‘reverse yield gap’, arises because the market value discounts expected future increases in dividend.

I first became interested in economics round about 1931 when I started studying for the Fellowship. None of you have experienced what it is like to live through a severe depression. In Liverpool unemployment was some 25% to 30% of the insured population. My brother and two cousins lost their jobs and were out of work for a long period. It was extremely demoralizing for them and the character of one was adversely affected for the rest of his life. This situation influenced me very much and made me an ardent radical. It seemed to me ridiculous that an economy should be working at full capacity one year and at 75% to 50% the next. Something was clearly wrong with the way we organized things. The mistakes were those of human beings and not those of God. (At that time many people did think that such things as trade cycles and rates of interest were natural phenomena.) To my young and simple mind an economic plan seemed a simple scheme to construct and I felt that it was only the obstruction of vested interests and the ignorance of the general public that prevented enlightened people putting into operation a plan that would preserve full employment and a reasonable standard of living for everybody. The experience of recent years suggests that there is much truth in this.

The purpose of this paper is not to consider the specific ratings that should be imposed on life assurance policies where the proposer is not acceptable at ordinary rates, but rather the methods used and problems involved in translating assessments of extra mortality into monetary terms. At times the two problems overlap so the division is not an absolute one.

The subject has been covered at various times in the past both at the Institute and the Faculty; since the war the subject has attracted more attention at the Faculty with papers by T. M. Springbett and then S. C. Keppie and A. C. Stepney (both in T.F.A.19), but there is also the well-known paper by W. Perks (J.I.A.78). An earlier paper is by W. P. Elderton (J.I.A.54).

This paper is intended to give a fairly complete picture of the actuary in Canada when read in conjunction with T. R. Suttie's paper, ‘The Actuary in Canada’ (J.S.S.13, 199). Suttie concentrated on the life insurance business in his paper, and with this in mind, I shall refer mainly to consulting actuarial work.

Consulting practice in Canada is very similar to that in Great Britain, where the major part of the actuary's time is devoted to pension funds. The main differences are that Canadian consulting firms may advertise, and may also include insurance brokerage as part of their business provided that they hold the necessary licences. The small amount of friendly society work in Canada is handled by actuaries who specialize in such work, and there is no market in reversions or life interests.

There is now no doubt that electronic computers have a wide application in the insurance industry. The main controversy during the next few years is likely to be over fields of application: we find ourselves in the position of a child who, having been presented with a costly and elaborate paint-box, looks around in trepidation for something to adorn which will not turn out to have been irreparably damaged by his efforts. The purpose of this paper is to describe the attempt of one life office, transacting ordinary life business, to sketch a preliminary outline before committing itself to the costly process of wholesale interior decoration.

The dispute over fields of application has already been given a rousing send-off by S. Benjamin's assertion that ‘the emphasis on data processing applications… has been an unfortunate mistake’ (Computers and Actuarial Science, J.S.S.17, 93). This paper will be concerned exclusively with such applications; however, it is hoped that this concern will not be regarded as retrogressive. It so happened that the investigation described here developed naturally from existing data processing methods within the office.

The papers submitted under Subject 4 of the 1964 Congress in London and Edinburgh were those concerned with the practical application of modern statistical techniques in all branches of insurance.

Fourteen papers from eight countries were presented for discussion in London, and the purpose of this note is to outline and comment briefly on the content of these papers—the discussions on related topics which took place in Edinburgh are not included in this review.

Statistical methods in general being of fairly recent origin it is not at once obvious whether a particular technique qualifies as modern or not, but I would think it fair to take it that, normally, the calculation of premiums, involving the intelligent classification of risks and the analysis of experience, comes within the field of classical statistical methods.

The treaty was signed by France, Belgium, Holland, Luxemburg, Italy and West Germany on 25 March 1957, and came into effect on 1 January 1958. The following is a summary of some of the relevant provisions of the Treaty. Since the Treaty is very long and complex it is inevitable that a short summary will appear to be incomplete and, in many respects, drastic and uncompromising. We think, however, that what is more important than a complete knowledge of the Treaty is the spirit which has prevailed throughout the negotiations and carrying out of the Treaty so far. It is essential to feel and understand this spirit of goodwill, fellowship and determination to succeed in order to tackle successfully the problems before us.

The imposition of a tax on capital gains invites enquiry into the effect on yields of redeemable fixed-interest securities purchased below their redemption prices. Attention has hitherto been focused on two yields in connexion with such securities, namely the yield ignoring tax, and the yield (net, or ‘grossed-up’) allowing for tax on interest payments but not on the capital gain at redemption date. Henceforth a third yield must also be considered, namely the yield (again net or ‘grossed-up’) allowing for tax on both the interest payments and the capital gain. The object of this note is to demonstrate certain relationships between these three yields, where the rate of tax payable on interest payments is assumed to be the same as that payable on the capital gain; otherwise the concept of a grossed-up net yield becomes ambiguous, if not meaningless.