A working party was set up in February 1999 by the Research Committee of the Life Board to consider the impact of a low inflationary environment on the financial services and investment markets with particular emphasis on companies conducting long-term insurance business.

The working party has produced an interim report which reviews the causes of the present expectation of low inflation and discusses evidence from the past and the role of demographics. It considers issues surrounding the composition of the retail price index, appropriate economic assumptions and the impact on investment markets, including the effect of charges on net returns to savers. The position of long-term insurance business is then considered in more detail, looking at HM Treasury return consequences as well as disclosure and product design features. Finally, there are two investigations, the first looking at the effect of low inflation on the achieved profits derived from different product designs, and the second looking at the changes in ruin probability for a with-profits office associated with declining inflation.

Company directors play a key role in any company and thus in the contribution which business makes to the economy and to society. Reform of company law is being actively debated. This places under the spotlight such questions as should directors' duties be made clearer? Should directors only owe duties to their shareholders? Are directors adequately monitored, for example in corporate activities, pay and political donations? The object of the lecture is to review areas of current debate and identify areas where changes are occurring or may occur.

This paper reviews the stochastic asset model described in Wilkie (1995) and previous work on refining this model. The paper then considers the application on non-linear modelling to investment series, considering both ARCH techniques and threshold modelling. The paper suggests a threshold autoregressive (TAR) system as a useful progression from the Wilkie (1995) model. The authors are making available (on compact disk) a collection of spreadsheets, which they have used to simulate the stochastic asset models which are considered in this paper.

This paper considers the application of discounted cash flow (DCF) techniques to the analysis of the property investment market. The traditional method of property valuation is briefly outlined and its shortcomings highlighted. An alternative DCF procedure is derived to calculate the present value of a property investment. This method will be familiar to actuaries, but is not always used in property disciplines. The sensitivities of this formulation to changes in the force of real interest, force of real rental growth and force of inflation are derived. It is suggested how these formulae may be used for property investment appraisal and risk analysis. We conclude that DCF offers a more flexible and accurate means of estimating the value of a property, and that property valuers, financial economists and actuaries should work jointly to develop practical DCF methods. However, so long as traditional methods of valuation prevail, a rational investor must use both methods to identify mispriced property assets. There have been few property contributions to the actuarial literature in the United Kingdom; this paper is intended to build on the few previous papers and suggests directions for future work.