Our earlier paper ‘The money supply, economic management and the gilt-edged market’ (J.I.A.96, 1) introduced the money supply as being ‘of importance to investment, in general because of possible changes in the economic management in the United Kingdom, and in particular because of the possible implications for the gilt-edged market’. To a large extent these changes have come about; the Authorities are now placing greater emphasis than in 1969 on controlling the money supply and support for the gilt-edged market was withdrawn when the Bank of England published Competition and Credit Control in May 1971.

2. The present paper is more fundamental for investment. The introduction to the earlier paper referred to our main research project into the uses of the financial statistics which were first published in 1962 as a result of the Radcliffe Committee Report. Changes in the management of the economy and the gilt-edged market were side issues, however important; the present paper describes some of the interim conclusions of the main project which is still continuing.

The Council of the Institute has for some time thought it would be advisable that members should have the opportunity of discussing the difficult problems of professional conduct and practice at a sessional meeting, particularly since the report on the subject by the Monopolies Commission (A report on the general effect on the public interest of certain restrictive practices so far as they prevail in relation to the supply of professional services. Cmnd. 4463). Hence this present paper.

Although the paper has been written by the present Chairman of the Institute's Professional Guidance Committee, and the main arguments are in general line with the views of that committee and of Council, the emphasis given to various points and the views on the detailed contents must be regarded as personal to the author.

1.1. Pension schemes and other plans written on an insured group basis present some of the most fascinating, challenging and paradoxical aspects of life offices’ business in the United Kingdom.

1.2. The fascination stems from each group scheme being a unique, unpredictable and sensitive unit, covering perhaps just a handful of lives or possibly many thousands of lives. Once established it may thrive and grow indefinitely.

In recent years a number of papers have been presented to the Institute dealing with the problem of how the actuary of a life office is to determine the amount of surplus which can safely be distributed to with-profit policyholders, and of how that surplus can be divided most equitably between different classes of policyholders.

There have been many sales of insurance companies in recent years, but there is nothing in the literature of the Institute which deals with valuation for this purpose. It is hoped that this paper and the discussion on it will fill this gap.

One of the earliest problems faced by actuaries and one which has persisted to modern times is that of designing and carrying out an investigation into a certain set of decremental rates, especially mortality rates. Many investigations have been conducted with a view to the derivation of a table of mortality rates, some of them of crucial importance to the British life insurance industry. Such tables as the OM, the A1924/29 and the A1949/52 tables have been so widely known and used that mention of them is scarcely necessary. However, despite the importance of such investigations, little detailed attention has been given to methods for determining a suitable term of the experience. The OM table was derived from data covering a term of 30 years, A1924/29 from a 6-year term and A1949/52 from a 4-year term. Were these terms reasonable or not?