Two previous papers have been presented on the South African life assurance market but they have both dealt with the Actuary in South Africa. The first one was presented in 1957 by Messrs. Smit, Sherman, Williams and Roger and the second in 1974 by Mr P. W. Barke.

The historical and geographical information given in this paper expands on that given by Mr Barke but is reproduced here for completeness.

Actuarial science has always employed theoretical principles in the solution of practical problems and this has often required a substantial amount of numerical work. Most of the calculations involved in conventional actuarial work are not, in concept, particularly difficult; in general, they take the form

Value=Amount payable × probability of payment × discounting factor.

For many years, the major difficulty of those engaged in the development of actuarial science was not the application of the principles behind their calculations, but the practicality of producing numerical answers to any particular problem. Much ingenious work has gone into the development of techniques designed to reduce the computational problems to manageable proportions. The most obvious example is the use of commutation functions, where, once a great deal of basic calculation has been performed, a very powerful tool is available, requiring only simple arithmetic. In an attempt to avoid such onerous numerical work, 'laws of mortality' have been developed. Under these, the decrement table may be described in terms of a mathematical function, which enables analytical techniques to be applied, simplifying the numerical work.

An employer contemplating the setting up of a pension scheme might wish to use the investment facilities of a life office for one of two reasons. He might wish to insure the investment risk; he might wish to use the life office's investment expertise in preference to his own or those of, say, an outside adviser. These are two distinct requirements and in analysing the usefulness of an insured pension scheme they have to be considered separately. This paper is concerned primarily with the former.

As, except in the case of the managed fund, no part of the life office's assets are allocated to any individual scheme, actuaries have devised various methods of allocating investment return to the scheme. This paper concentrates on the system known as Deposit Administration (DA).

A Report with the above title, which forms Section B of this paper, was presented at the conference at Hythe, Kent in September 1977 of the General Insurance Study Group, which is sponsored jointly by the Institute and the Faculty. The conference was attended by about sixty people, nearly all non-life practitioners and nearly all actuaries.

Previous papers on technical reserves had discussed various statistical methods of estimating outstanding claim reserves, and in some cases had included some data to provide numerical examples of the use of the methods. In our report we chose to start with some data and to look at the degree of stability in those data. Inspection of the data showed remarkably stable patterns and it was apparent that a simple method not previously described based on average payments was likely to be satisfactory for estimating the reserve for outstanding claims. The report then seeks to explain why the authors consider that this method has advantages over two well-known but more complicated methods.

The complete role of the life reassurer in the U.K. is not well known. Many will be aware of the involvement of the reassurer in the handling of very large risks or impaired lives, but relatively few may have experience of the other areas in which a reassurer operates. The aim of this paper is to demonstrate the extent of the reassurer's services in the U.K.

Very few papers appear to have been written on reassurance for either the Students Society or the Institute, there having been two papers to the Students Society, one by A. J. Steeds in 1953 (J.S.S. XII, part 3) and another by I. C. Smart in 1970, and the most recent paper submitted to the Institute by G. T. Foster, in 1946 (J.I.A. LXXII).

Reassurance began in the early days of life assurance development, by the simple exchange of business between two life offices. The last fifty years have seen the emergence of a small number of life offices known as professional reassurers; life offices whose sole purpose is the acceptance of reassurance. This specialization has produced an increasing dependence by the life offices on the professional reassurer for their reassurance needs.

Unlike his U.K. counterpart, who opines on a ‘true and fair view’, the more limited objective of the U.S. Certified Public Accountant is to certify that financial statements present fairly ‘in conformity with generally accepted accounting principles’. Generally accepted accounting principles, as applicable to proprietary life insurance companies, are set out in the American Institute of Certified Public Accountants Audit Guide ‘Audits of Stock Life Insurance Companies’ (1) (hereafter referred to as the ‘Audit Guide’). Despite being neither general in application nor universally accepted, it is these accounting principles which are commonly known as U.S. GAAP.

U.S. GAAP are relevant to U.K. actuaries because:

(a) Many actuaries work for, or with, life insurance subsidiaries of U.S. companies which are required to prepare financial statements in accordance with U.S. GAAP

(b) More generally, on the grounds that developments in the U.S. often precede similar developments in the U.K., we should anticipate the possible development of U.K. generally accepted accounting principles (or even EEC GAAP).

The new Earnings-Related State Pension Scheme was introduced, under the terms of the Social Security Pensions Act, 1975, on 6th April, 1978. The arrangements represented the product of more than fifteen years' efforts to establish a meaningful earnings-related supplement to the flat-rate basic State pension. Various proposals had been mooted, the first of which was probably the Graduated Pension Scheme, introduced in 1961, which was followed by the Crossman and Joseph schemes. The latter two schemes fell foul of changes of government and it was not until 1975 that the joint efforts of Barbara Castle and the late Brian O'Malley reached fruition in the Social Security Pensions Act 1975.

The Earnings-Related State Pension Scheme embodied in the Social Security Pensions Act 1975 ultimately received the approval of all the major political parties. It provides an earnings-related pension over and above the flat-rate basic State pension for all employees except those who reach pensionable age (65 for men, 60 for women) in the fiscal year commencing 6th April 1978 or married women (or widows) who have opted to make National Insurance contributions at the reduced rate and, therefore, not participate for retirement benefits from the State Scheme.

The authors have endeavoured to highlight those aspects which, because of the way they contrast with British practices, are likely to be of particular interest to actuaries in the U.K.

Subjects reviewed include economic and demographic trends; a description of the life companies, both Canadian and foreign, operating in Canada; the regulatory environment including the recent legislative changes designed to bring financial statements closer to ‘GAAP’; the new actuarial valuation procedures and the wider responsibilities of the signing actuary; asset values and the new treatment of investment gains and losses; taxation; marketing systems; and the major types of policies and benefits sold, including the implications of guaranteed cash values.

Also included is a review of the actuarial profession and the education of the actuary in Canada.