Perhaps this paper should be entitled A Description of Methods Being Used in Connexion With a Contract of the Grant and Kingsnorth Category ‘A’ Type, For Want of Any Better Ideas. (The reference is to Unit Trusts and Equitylinked Endowment Assurances by A. T. Grant and G. A. Kingsnorth, J.I.A. 93, 387.) It has been written because the publication of the Scott Report and the passing of the Insurance Companies Act make it desirable that the Institute should discuss unit-linked assurance again at this time, and because certain aspects, in particular maturity guarantees and reserves for tax on capital gains, have not been dealt with adequately in the past. Propositions in respect of these are made in the paper, and it is hoped that, as a result of discussion, ‘generally accepted actuarial principles‘category B’ type contracts, for example considerations affecting pricing units net of tax on capital gains, but the paper does not attempt to deal with this type of contract more generally, as fundamentally different considerations are involved. It does deal with ‘category A’ policies linked to unitized internal funds as well as those linked to units of Authorized Unit Trusts.

This paper arose from a report prepared by a working party set up under the auspices of the Research Committee. The views in the paper are my own but they are, to a considerable extent, based upon work done by Messrs J. K. W. Davies and P. N. S. Clark. I am also indebted to Mr R. T. Foster of the Government Actuary's Department for clarifying points arising from the current Regulations.

2. The paper is concerned with the Returns made by Life Offices to the Department of Trade and Industry in accordance with The Insurance Companies (Accounts and Forms) Regulations 1968. The aims of this paper are:

(i) to discuss the objectives of the Returns,

(ii) to discuss whether the questions asked by the present Regulations and the answers currently being given in the Returns achieve these objectives,

(iii) to discuss possible changes in the Regulations, and

(iv) to discuss the role of the actuary in relation to the Returns and also in relation to the auditor.

One of the most powerful devices in the theory of compound interest is Makeham's formula. The essence of the formula may be stated as follows:

Consider an admitted loan of C bearing interest at rate g per annum (payable pthly in arrear) per unit of admitted capital. The loan is to be repaid by a series of payments each of which contains a capital portion and an interest portion. Let K be the value at rate i per annum effective of all the capital portions.

It is quite common for stocks (usually loan stocks) to be issued by companies and purchased by investors, which include among their terms an option to convert at some future date into other stocks (usually ordinary shares) on specific terms. Such options obviously have value, but I am unaware of any simple published method for estimating the value of such options in practical cases. The purpose of this note is to suggest a formula, based upon easily understood estimates of the future market prices of the stocks in question, which may be applied readily in practice to estimate the value of such options.

Pollard and Pollard have considered a stochastic approach to certain actuarial problems. In their notation ãx denotes the random variable whose expected value is ax. The random variable ãx depends on the random variable, time until death and the (assumed constant) rate of interest. The authors show how to calculate the second and higher-order moments of some common actuarial random variables such as ãx and Ãx. The second moments, in particular, are useful in estimating confidence limits for the total liability in respect of a group of contracts.

Classification of Stock Exchange Securities by Industry

As a result of quarterly meetings of the Index Constituents & Industrial Classification Committee, the classifications of 60 companies were changed either because the original classification was found to be wrong, or because the company had clearly changed its business. These changes were only made after notification to the company concerned and in most cases after discussions with the company; apart from those with whom negotiations had begun in 1972, a further 65 companies were approached in 1973. Classifications of newly floated companies were made by the Stock Exchange Quotations Department but the published lists were scrutinized and occasional changes were recommended.

The original classifications were set out in the 1970 note in this series (J.I.A., 97, 111–12). During 1973, Group 52 was renamed ‘Newspapers & Periodicals’, and five minor amendments to the definitions of other Groups were made.

ASTIN—the section of the International Actuarial Association whose main interest is in the actuarial study of non-life insurance—held its 10th Colloquium at the University of Essex from 4–8 September 1973.

In all 161 members, representatives of corporate members, and accompanying persons attended, including 20 members of the Institute of Actuaries and 4 Fellows of the Faculty of Actuaries. 21 countries were represented and for the first time Great Britain provided the largest delegation.

The subject for the Colloquium was ‘Mathematical and Statistical Models underlying nonlife insurance’ and 24 papers or written contributions were presented. The Colloquium was opened by R. E. Beard, O.B.E., F.I.A., in his dual capacity as co-ordinator of the Scientific Programme and Professor at Essex University. The Chairman of ASTIN, Professor Bühlmann from Switzerland, expressed the gratitude of all to the University of Essex for the facilities given and his pleasure at the 10th Colloquium being held in the United Kingdom, a country recognized as the Father of Insurance.

Sir Andrew Herrick Rowell died on 27 August 1973 in his 84th year. To members of the Institute one tribute overshadows all the rest. He was our Centenary President. It was in June 1948 that the bonds of friendship and affection, so strong among actuaries the world over, but which had been so hard to sustain in the preceding years of war and its aftermath, were gloriously restored with the Centenary Assembly of the Institute of Actuaries in London at which Andrew Rowell, newly knighted by His Majesty, presided so memorably. To his contemporaries the Centenary Assembly was a time for old friends and new resolves. To one young actuary, not yet fully qualified, and he cannot have been alone, it was the kindling of a flame of love of and pride in his profession which still burns brightly today.