This paper describes a practical co-ordinated system of calculating financial terms for policy alterations and calculating surrender and paid-up values of policies which have been altered. The system is primarily designed to produce numerical results which are consistent, equitable and capable of evaluation without the need for special actuarial experience. The calculation formulae make use of the tabular rates of surrender values and paid-up values currently granted for unaltered policies and the current premium rates charged for new policies; the often difficult selection of suitable actuarial functions is thereby avoided automatically without departing from general actuarial principles. Since the actuarial bases inherent in these tabular rates are not used explicitly the rates can be changed independently at any time without affecting the use of the formulae. The system is equally suitable for operation by clerical staff or for computer application and should produce economies in the valuable time of skilled staff.

At the end of the paper, examples are given comparing results with those calculated by conventional methods.

The first, introductory, section of the paper refers to the Committee's main report on the mortality of immediate annuitants in 1967-70 and to the features of the latest data which prevent it from recommending the preparation of a new standard table at present.

The second section describes the preliminary work which led to the suggestion of a graduation formula which appeared to fit the 1967-70 assured lives' data at each duration, and over the whole range of ages up to 90; the graduation, like the experience, showed decreasing mortality with increasing age up to age 28. This work included consideration of mortality from motor vehicle accidents at the ages either side of 20, where the shape of the curve differed from the population experience. It also examined ages 90 and over, to indicate the extent to which very late notification of deaths to the offices distorted the exposed to risk.

The third section describes the fitting, with the aid of a computer, of the formula suggested in the preceding section, in order to produce two alternative graduations, one with a two-year select period, the other a five-year select period. Below age 17, where the data were insufficient to indicate the underlying course of the mortality curve, an arbitrary extension of the graduations was made by reference to population experience. The graduations are compared with earlier tables in a short fourth section.

The fifth and final section examines the possibility of producing a new table for pensioners, a class of lives for which hitherto there has been no appropriate mortality yardstick. It concludes with recommendations for the preparation of experience tables for male and female pensioners based on the 1967-70 data for “lives”.

The intention of the paper is to describe the benefits of measuring investment performance and to give methods of so doing.

Section 1 gives the background to the subject; it points to the use which an objective investment performance measurement has for both the investment manager and the investor.

Section 2 describes the methods of measuring performance using overall rates of return. An example is given of results by three possible methods.

Section 3 deals with comparisons of performance. The advantage of analysing results is given. Methods are suggested for comparisons of actual rates of return with those of indices, notional portfolios and other funds.

Section 4 introduces the idea of risk, suggesting that risk is something for future policy rather than past performance measurement.

Section 5 applies the principles of performance to various types of funds giving difficulties particular to each.

The paper ends with a plea for the use of a common objective performance measurement.

The purpose of the paper is to stimulate a discussion among the members of the actuarial profession on the part the actuary can play in the assessment of compensation for loss of support, in order that some consistency of approach (which the authors regard as essential) can be evolved.

The paper commences with a discussion on the unique ability of the actuary to determine the capital value of a given series of future payments, contingent upon human survival, and the significant part that this can play in the assessment of compensation for loss of support. The extent to which this ability is accepted by the Courts is discussed, and reference is made in this regard to the paper by J. H. Prevett in J.I.A., Vol. 94, pp. 293 et seq.

The authors then proceed to consider the technical aspects of valuing the loss of future support, drawing particular attention to the need for the actuary not to be held responsible for the non-technical aspects.

The paper concludes with a consideration of the general aspects of the subject, such as the professional conduct of the actuary at Court appear ances and other stages of a claim, the alternative of awarding compensation in the form of an income, and the use of actuarial assessors.

The Authors are members of a Working Party established by the Councils of the Faculty and Institute to consider the Department of Trade's proposed Rules for valuing the liabilities of long-term business.

The paper opens with a short introduction followed by Part 2 which considers the control systems operating in several overseas territories. Part 3 is largely historical and traces the development of actuarial thought and practice since the war. The negotiations in Europe are also covered. Having set the scene, the Authors move to consideration of the Department of Trade's proposals (the proposed Rules for valuation of liabilities are included as an Appendix to the Paper). After a brief description of the proposed Asset Value Regulations in Part 4 the net premium valuation method is discussed in Part 5 and the problems of large fluctuations in the interest basis are illustrated by examples. Possible modifications to the conventional formula are explored with further examples. The elements of the valuation basis are discussed in turn with particular emphasis on the valuation rate of interest.

The Authors conclude that the problems arising from use of high rates of interest in valuation are not so much a function of the inadequacy of the valuation method as an indication of the real financial strains to which offices are exposed in current conditions. The paper ends with a reminder that with the varied traditions of the British market no one set of Valuation Rules can satisfactorily cover every special case. Any statutory basis therefore must be seen as a compromise, and the Authors touch on special cases where they feel that it would be appropriate for the authorities to exercise their discretionary powers.

In England and Wales prior to 1956 annual estimates for the infant mortality rate q0 were obtained as the quotient of an observed number of deaths and an exposure calculated by reference to the related births. Since 1956, however, infant mortality rates have been measured as the ratio of the numbers of deaths and births in a given calendar year (cf. reference 4, Part I, supplement to Table 24).

Let us suppose, for the purpose of calculating premium rates, that interest rates will not fall below those of the straight lines from their present value io to in in n years' time (in < io), thereafter remaining constant at in. On the basis of this assumption we derive formulae for the (minimum) effective rates of interest on single and annual premium contracts of term m years (m ≤ n, or m > n) and give examples in which gross interest rates fall from 8%, 9%, 10%, 11%, to 4½% in 40 years' time, and other examples. We conclude with a discussion of modifications to the term of the contracts which enable our results to be used for pure endowments, with-return endowments, endowment assurances, deferred annuities and other policies in life assurance and pensions business, and we mention some objections to our methods.

Our thanks are due to C. M. Stewart, F.I.A., F.S.S., for suggesting some improvements to this note.