bluuebunny/crossref_metadata_2025 huggingface dataset:
The Influence of Expenses and Selection on Reserves for recently-effected Policies
Authors: Buchanan James
Published: July 2016

In a paper read before the Actuarial Society of Edinburgh more than thirty years ago, the late Mr. D. Deuchar discussed the question of expenses and its relation to new business, and advocated the subdivision between new and renewal premiums of the items Premiums received, Expenses, and Commission in the revenue account. From a table compiled by him, relating to fifteen Scottish offices, it appeared that commission and expenses amounted to 13¼ per cent of the premium income; or that, if 7¼ per cent be allowed for renewal expenses, initial expenditure absorbed about 80 per cent of the (estimated) new premiums. The question subsequently received much attention from Dr. Sprague, who stated (J. I. A., xix, 313) that about 7½ per cent of renewal premiums was “generally amply sufficient for the purpose of administering the existing business of a company that pays commission and employs agencies; and that any expenditure beyond this must be considered as incurred exclusively on account of the new business”; while more recently (Transactions of the First International Congress of Actuaries, p. 190) he has expressed the opinion that “the average expenditure of prosperous and well-managed offices may be taken as 80 per cent of the new premiums and 7½ per cent of the renewal premiums”.
Titles to Life Assurance Policies
Authors: Sprague Alfred Ernest
Published: July 2016

The chief object for which insurance offices exist is to pay claims; but before any claim can be paid, the question arises—who is the proper person to receive the payment ? If any mistake be made in this, the office may find itself involved in troublesome and expensive legal proceedings, and be compelled to pay the claim twice over. This consideration shows the necessity of insurance officials having some knowledge of law, as it is almost impracticable for them to refer every legal question to their solicitors; and my present object is to draw attention to some of the elementary points which arise in the ordinary course of our business. On the shelves of the library there are to be found papers by Mr. Barrand, Mr. Warren Crosbie, and Mr. Hayter, which should be studied carefully (in addition to the text books) by every one desirous of qualifying himself for a position of responsibility in the claims or law department of his office; but these papers do not exhaust the subject, and I do not propose to allude to the points discussed therein, except in the cases where some further explanation seems desirable or where there has been an alteration in the law or in the practice of the offices.
Notes on Summation and Interpolation
Authors: Fyfe Austyn J. C.
Published: July 2016

One element underlying the whole theory of Life Contingencies is that of a Series. Thus in the Life Table we have a collection of the more usual and elementary functions, every column forming a series, and it will at once suggest itself that as soon as the actual calculation of any problem is faced, we must sooner or later arrive at a Series, and the solution of the problem will finally depend on our ability to deal with this Series. The same is obviously true of other branches of our Science, such as those derived from statistics of Sickness, of Marriage and of Issue, and, of course, in the purely algebraical theory of Compound Interest.
Some Notes on the Death Duties from an Actuarial Point of View
Authors: Denmead John Charles
Published: July 2016

When some time ago I was flattered with an invitation to read a paper before the Faculty of Actuaries, it was suggested that I should deal with the question of the amount to be deducted, in valuing reversions, for duties which, will be payable out of the funds, in reversion.

This is a somewhat difficult question to deal with directly, and I fear it will be thought that in the following pages the raison d'être of my paper has been forgotten. I may say, however, that while not overlooking the ostensible object in view, I have felt that the best way of giving effect to it is to write a short account of the various death duties which will have to be considered in making such valuations. The only alternative method of dealing with the subject which occurred to me, was to give a series of examples, but this would involve such a large number of instances to meet even a small fraction of the possible cases that may arise, in practice, that I had to abandon all idea of treating the subject in this way. I must fall back upon general principles and not rely on concrete instances, although examples of the general principles are given in a few cases.
Notes on the British Offices Life Annuity Tables (1893); with special reference (a) to the persistence of Selection, in relation to the Graduated Tables; (b) to the computation of Joint Annuities, by special applications of the Law of Uniform Seniority
Authors: Ackland Thomas G.
Published: July 2016

In response to the invitation of your President to prepare and submit a Paper to the Faculty during the present session, I thought that it would be appropriate, and I hope also of some interest to the Members, if I endeavoured to deal with a section of that important Investigation, recently completed, into the mortality of Assured Lives and Annuitants, in which the Faculty and the Institute so happily collaborated, to the great advantage of the actuarial profession.
The Improvement in Vitality as disclosed in the British Life Offices' Experience
Authors: Buchanan James
Published: July 2016

The improvement in vitality is a subject of interest alike to the actuary and to the public statistician. It formed one of the topics for discussion at the Fourth International Congress of Actuaries held in New York in 1903, and papers were submitted by actuaries of different countries dealing with the subject mainly from the point of view of population statistics. The results of most direct interest to us were embodied in a paper by Mr. S. G. Warner On the Improvement in Longevity in the Nineteenth Century. They were based on the summarised returns of the Registrar-General's Reports for England and Wales for the years 1875 and 1900; and, while admitting the defects inherent in the data, Mr. Warner held that the statistics showed “a distinct decrease in the rate of “mortality as the century progresses; a decrease, on the whole, “so steady and symmetrical that it might fairly be looked on as a “settled and permanent tendency.
The Eligibility of Aged Lives for Assurance
Authors: Richmond George William
Published: July 2016

So far back as 1863 the Institute of Actuaries stated, in preparing the HM Experience, that the most important question was the rate of mortality at the more advanced ages of assured lives. The information so collected has since been materially added to by the British Offices' Experience of 1893. At the same time the rates of premium charged by various life assurance offices for ages at entry 60 and upwards show large differences, which sufficiently prove that the rating of such lives does not yet rest on anything like a definite basis. The reason is clear enough, for the available facts are still necessarily scanty, and consequently the probability of fluctuation or accidental variation in the rate of mortality is considerable. As life advances the flame of vitality burns lower, the average rate of mortality increases, and frequently there are material changes from one year to another. While some lives of from 60 to 70 years of age have 30 years of life before them, a large number will certainly die within a much shorter period, even although the originally defective have been excluded. At such ages health suffers fatal impairment with greater rapidity than at younger ages, and the impairment can be less easily foreseen and provided against. Thus it is evident that if an office is to accept proposals on the lives of aged persons, exceptional care must be taken with the medical examination, that the average quality of the stock selected may be sufficiently good. It has to be recalled that the effect of variation in the average rate of mortality is greater at advanced ages than at young ages. If, for example, the premium at an advanced age at entry be 10 per cent, per annum, it makes a marked difference to the financial results whether each life contributes on the average for seven years or for eight. At young ages, with a premium of say two per cent, per annum, a variation of one year in the expectation of life is not so important.
A Method of Using Mechanical Sorting and Tabulating for the Preparation and Issue of Bonus Intimations
Authors: Davie James , Scrimgeour D. A. B.
Published: July 2016

The problem of reduction of the work involved in life assurance valuation has long engaged the attention of the actuarial profession. The Z method, Karup's method, and the various short valuation methods have resulted in reduction of the groupings necessary for valuation. There still remains, however, summation of the sums assured, bonuses, premiums, net premiums, Z's etc. etc. of the individual cases forming these groups, and to expedite this work we may have recourse to mechanical methods of sorting and tabulating.

These methods have been employed for many years by Life Assurance Offices in the United States and by the large Industrial Offices in this country, but it is only within the past few years that ordinary Life Offices here have begun to adopt them. The number of ordinary Life Offices in this country making use of mechanical methods of sorting and tabulating is still, however, small.
The Compilation of Price Index Numbers and Yield Statistics Relative to Stock Exchange Securities
Authors: Murray A. C.
Published: July 2016

Synopsis

Reference is made in the introductory remarks to the appointment of Investment Research Committees by the Faculty and Institute of Actuaries to undertake, in the first instance, the compilation of a comprehensive service of Index Numbers relating to British Stock Exchange Securities which will be suitable for Insurance Companies, Trust Companies, and so on. The Committees have been at work for some time, and it is hoped that publication of the results will be commenced at an early date. The Paper discusses the purposes of such indexes and the most suitable form of index numbers for the purposes decided upon. The difficulties arise from two sources ; the variety of uses for which the index must cater, and the requirement that the results must be comparable between any two dates in the series.

At every point in compilation the objects of the results must be carefully kept in view. These objects are divided under three headings : (a) uses directly connected with current investment activities ; (b) investigation of the effect of economic financial and political events on the level of security prices ; and (c) assistance in measuring approximately changes in the value of a portfolio of investments. It is suggested that securities should be divided into homogeneous classes, and a separate index calculated for each class. The wide groups “Fixed Interest” and “Variable Dividend” are not suitable for the purposes involved. The weighting system should approximate to the distribution likely to be found in an Insurance or Trust Company's investments.

Within each class companies' holdings will tend to approximate more nearly to equal amounts of money in each security than to any other distribution for which a system of varied weights would cater. Simple weights are accordingly advocated.

Various methods of averaging are discussed and reasons given for preferring the geometric average of price ratios to other methods. The dangers of adopting the arithmetic average—where the resulting figures are always dependent on the base prices—are illustrated in Table I. The geometric results are independent of base. Even using the geometric average great care must be exercised in applying the results to valuation purposes in groups where individual price movements show wide divergencies. The “error” involved by the geometric method, however, is always in the same direction. Capital appreciation is never overstated and depreciation never understated.

The foregoing remarks refer to price indexes. To obtain maximum utility from the results yield statistics also are required. The very different nature of the problem of yields is stated and an arithmetic average of individual yields in each group is advocated. While the price index should be related to 100 at the starting-point it is obviously preferable to publish actual yield averages.
The Selection of Lives (Revised Edition 1930)
Authors: Orr Lewis P.
Published: July 2016

Synopsis

The Paper is a revised edition of that contributed to the Faculty in 1919. In the interval there have been developments in medico-actuarial science, and it seemed desirable that they should be recorded.

The use and abuse of statistics are dealt with, and reference is made to Primary Selection by Branch Officials and to Medical Selection.

The Section of Family History Impairments opens with a reference to Heredity, Mendelism and Eugenics. The influence of Tuberculosis is discussed, and suggestions made for the assessing of the lives concerned. In view of the circumstance that there exists among many a confident belief in the hereditary nature of Cancer, there are given reasons for holding the opinion that when the Cancer problem is solved it is probable that the influence, if any, of heredity will be found to be distinctly small, and possibly negligible. A number of other diseases are dealt with briefly.

The Section of Personal History Impairments opens with Heart Abnormalities. Blood Pressure is gone into at some length. It is pointed out that hitherto there has been no recognised Standard Table of Blood Pressure in use among British Offices, and there is now put forward one compiled from the record of 1444 first-class lives. It is regarded as a Tentative Table, and is given in the hope that it will stimulate the production of another founded on a broader basis. The method of ascertaining the Blood Pressure is explained in an Appendix. Various other impairments are referred to; and probably of the articles revised the most important are those relating to Glycosuria and Gastroduodenal Ulcers.

Weight in relation to Height and Age is gone into, and reasons given for retaining the Table of 1919 in preference to the later Table of Seven Offices.

Female Lives, Non-medical Examination Business, Children's Assurances, etc., are the subjects of other paragraphs.

The Paper concludes with a reference to the public benefit of Life Assurance Research.
The Effect of a Falling Rate of Interest on the Values of Certain Actuarial Functions
Authors: Stoodley Charles L.
Published: July 2016

Synopsis

The paper first discusses in a general way the methods hitherto devised for giving effect in actuarial calculations to a falling rate of interest, which methods it is suggested are cumbersome and inelastic and so of little practical value. A method is put forward which it is claimed facilitates the study of the many important and interesting problems involved in the assumption of a declining rate of interest.

Where it is the rate of interest in the tth year, the assumption is made that

where a, c and k are constants to be determined.

By making certain substitutions the following equation for the value of it is derived :–

It is demonstrated that under certain conditions this equation produces a decreasing series, and that by giving the constants suitable values a wide range of interest curves of the same general character may be obtained.

The formula is developed in combination with actuarial functions, and it is shown that where f′(x) represents the value of a function at a decreasing rate of interest determined by the above formula

where is calculated at rate k and at rate l.

The method is applied to the evaluation of annuities, reversions and other actuarial functions under four sets of interest conditions and the results are analysed and compared with values on a 4 per cent. basis.

The cognate question of an increasing rate is also touched upon.
Joint Life Annuities – Some Experiments with the A1924–29 Table
Authors: King A. E. , Reid A. R.
Published: July 2016

Synopsis

The two main objects of the paper are :—

(1) To ascertain what modifications in Makeham's Law are necessary in order that the principle of Uniform Seniority may be applied to the A1924–29 ult. table.

(2) To ascertain whether some approximate method is readily available for the calculation of joint life annuity values according to the A1924–29 ult. table.

As regards (1) developments of the suggestions put forward in the discussion following Mr. C. L. Stoodley's paper to the Faculty in February 1934 are examined, and the conclusion is reached that, while the results are somewhat disappointing so far as the A1924-29 table is concerned, some of the formulae brought out may yet prove of practical use when applied to a mortality table more free from heterogeneous matter.

In the second part of the paper the results of applying to the A1924–29 ult. table several standard approximate methods are first examined, and it is shown that such methods are liable to produce systematic errors when applied to this table. Two new methods of approximation are then developed, which are shown to yield much more satisfactory results, and tables are reproduced to facilitate the practical application of these methods.
Some Points that have Arisen out of the Continuous Investigation into the Mortality of Assured Lives, 1924–1929
Authors: Elderton W. Palin , Oakley H. J. P. , Smither H. B.
Published: July 2016

Synopsis

The objects of this paper are (1) to set out for members of the profession some account of the further investigations that have been made into the statistics that formed the basis of the A1924–29 Table; (2) to correct certain errors that have been discovered; (3) to explain the possible weaknesses in the statistics; (4) to discuss the variations in mortality shown by individual offices; and (5) to give some idea of the range in mortality above and below the combined result of all the offices.

In an endeavour to fulfil those objects—

(1) There are made available in the appendices the various enquiries which, subsequent to the publication of the A1924–29 Table, were made of the contributing offices;

(2) The net alterations in the total deaths as a result of these enquiries are detailed, including the two major errors already known;

(3) The various factors calling for care and attention are examined;

(4) The variations in mortality shown by individual offices are set out in tabular form without disclosing their identity;

(5) Light and heavy mortality tables are produced with certain monetary functions by what are termed light and heavy mortality in comparison with the standard A1924–29, these light and heavy mortality tables being made up from certain combinations of offices at either extreme of the tabulated list.

The comforting conclusion is reached that the Al924–29 Table is a satisfactory representation of the type of mortality revealed by most of the offices, and may be used, for practical purposes by the large majority.

A final word is given in explanation of the census method, having in mind the importance of including all data which should properly be returned, particularly in the case of early deaths.

Thus, it is laid down that a death should not be omitted if the life, had it survived, would have been included amongst the “in force” to which the deaths are related; and there follows the golden rule: “A death must be included at a duration if, had a ‘census’ (or enumeration of the policies in force) been taken the moment before death, the case would have been counted as in force at that duration.”
Some Recent Actuarial Developments in the United States of America
Authors: Maclean J. B.
Published: July 2016

Synopsis

The paper discusses developments resulting from (1) the recent passage by most of the state legislatures of the “Standard Valuation Law” and the “Standard Non-forfeiture Law,” and (2) the general adoption by the companies of a lower interest assumption in the calculation of premiums, reserves and non-forfeiture values.

After a brief review of the system of regulation of life insurance in the United States and of the more important differences in practice as compared with practice in the United Kingdom, the paper proceeds to outline the background which led to the appointment of the “Guertin Committee” by the National Association of Insurance Commissioners to study and report on the need for a new mortality table and related matters and (subsequently) on non-forfeiture benefits. The main recommendations of the Committee and the subsequent modifications thereof as adopted by the Commissioners and later embodied in the Standard Laws are detailed.

The effects on life insurance operations of the new Standard Laws in conjunction with lower interest assumptions and the marked upward trend in expenses are discussed. The paper concludes with a brief reference to two important changes being made by some companies in their policy conditions.
Notes on Constant and Increasing Extra Mortality
Authors: Keppie S. C. , Stepney A. C.
Published: July 2016

Synopsis

The paper deals with the types of under-average mortality which may be expressed either as a constant addition or as a fixed percentage addition to A1924-29 ultimate qx.

For various constant and percentage additions, tables are given which show:–

(a)The extra premiums required, for different classes of policy, in addition to A1924-29 2½ per cent. ult. net premiums.

(b)The level debts equivalent to certain of the extra premiums.

(c)The smaller extra premiums required if Double Endowment Assurances are issued in lieu of Endowment Assurances.
Theories of Probability
Authors: Aitken A. C.
Published: July 2016

Synopsis

Various definitions of mathematical probability are described and commented upon: (i) the classical formulation, based on the ratio of favourable to total “equally likely” aspects of a system; (ii) formulations based on relative frequency in a sequence of trials, or on the limit of relative frequency as the number of trials is increased indefinitely; (iii) von Mises' refinement of this, in which the sequences obey special postulates ensuring “randomness”; (iv) modern revisions of the classical definition, “equally likely” aspects being replaced by an aggregate, and ratio of aspects by relative measure of a sub-aggregate; (v) the approach of Keynes, in which probability is the “logic of uncertain inference,” developed by a symbolic algebra; (vi) the approach of Jeffreys, by axioms and conventions of procedure, based on the principle of indifference and the use of the rule of inverse probability. It is suggested that, whereas in formulations based on relative frequency, frequency cannot be held to afford any explanation of the facts of frequency, in the a priori formulations, on the other hand, any postulates put forward are still very far from explaining to inquiring minds the commonly observed phenomena of so-called chance. It is further suggested that in actuarial applications the nexus between axioms of probability and causes of mortality is especially obscure, with consequent need of caution in adopting and interpreting the more refined modern methods.
Some Observations on the Causes of Death in Life Assurance Claims
Authors: Dickson Kenneth
Published: July 2016

Synopsis

The paper is based on the analysis of the causes of death in 10,000 claims which occurred in the quinquennium 1943-1947 in six life offices, three Scottish and three English.

These claims are subdivided into two classes of lives, those who reached and those who failed to reach their expectation.

The causes of death are arranged in most cases as in the Registrar-General's annual review of England and Wales, and are tabulated in age groups.

The increased incidence of some diseases and the decline or disappearance of others are touched upon, whilst special reference is made to the heavy toll exacted by cardio-vascular disease and by cancer.

Deaths due directly to the War, both civilian and in the Services, are included in the total number of claims but are omitted from statistical calculations. This applies also to all deaths of female policyholders. A brief reference is made to the relative mortality from certain diseases in those lives who reached their expectations and those who failed to reach it. It is suggested that greater leniency might be extended in certain types of disorders for which proposers are usually rated up, since deaths from such ailments seldom occur.
State Insurance against Unemployment
Authors: Thomson John Walter
Published: July 2016

The Science of Sociology is of comparatively recent origin, but its growth and evolution within the last few years have been remarkable, and in no branch of its efforts has this development been more marked than in that of “Social Insurances.” There have now been held no fewer than nine International Congresses dealing with this subject, productive of numerous papers and many voluminous reports. Economists and statesmen of all leading nations have been giving it their earnest attention for some years past, and in many countries the question has passed from the realm of theory into that of practical politics. Broadly viewed, the term “Social Insurance” may be taken to apply to all classes of insurance against contingencies to which the body politic is exposed; in a stricter sense it is now used to denote the insurance of the working classes against sickness, accident, invalidity, old age, unemployment, and kindred contingencies. With only one aspect of the problem have I ventured to deal in this paper—Insurance against Unemployment.
The Selection of Lives
Authors: Orr Lewis P.
Published: July 2016

Upon the selection of lives proposed for assurance depends, in no small degree, the measure of prosperity of a Life Assurance Company. So important is this selection that, considering the amount of attention given to other branches of actuarial science, it is rather surprising that in the past there has been a comparatively limited amount given by our profession to its study. Innumerable and valuable are the books and papers which have drawn information and lessons from our Tables of Mortality—Tables which form the foundation upon which the whole structure of Life Assurance is reared; but we need occasionally to be reminded that in reality those Tables themselves were based initially upon the selection of the individual life, and that consequently in our everyday work of selection we are consciously or unconsciously setting the standard of the great Mortality Tables of the future, which in their day will in turn vitally affect our business and its immense financial interests.
Gerontology—Implications for Future Mortality Experience
Authors: Comfort Alex
Published: July 2016

Synopsis

Up to the present, medicine has successfully concentrated on the treatment of specific diseases and the successful progress has contributed notably to reductions in mortality rates in early and middle life. This progress has, however, not materially increased the total life span. Future improvements in longevity may therefore come from methods of delaying the “aging” process, rather than from specific advances in preventative medicine. Such methods are known to be effective when applied to the animal world, and the possibility of applying them to human life opens fascinating prospects. The possibilities of, and need for research into these factors are discussed.
The Computer for Investment Research
Authors: Plymen J. , Prevett R. M.
Published: July 2016

Synopsis

Three reports made to the International Congresses of the European Federation of Financial Analysts Societies on the development of investment analysis by computer are discussed in Part I. The 1966 and 1968 reports were mainly concerned with processing investment statistics, pricing individual shares or selecting portfolios by mathematical means. By 1970, however, some of the more elaborate schemes for pricing equities and selecting portfolios had been abandoned, more emphasis being given to data processing of investment statistics and to analysing by computer special categories of investments where a considerable volume of regular investment statistics are available and extensive calculations are required.

The authors then proceed to describe two practical computer applications dealing with specialised classes of share. Part II deals with the application of simple statistical techniques to investment trust shares in an attempt to select those that are “cheap” or “dear”. The suggested method, tested for the first nine months of 1971, showed that the shares recommended as “buys” recorded a gain of 4.1% better than the investment trust index, whilst the “sales” underperformed the index to the extent of 6.8%.

The finances of the television rental companies have distinct analogies with those of a life assurance business. TV sets have a life span like a mortality experience and their installation costs involve a new business strain; Part III demonstrates how a computer model of a TV rental company can be used to assist the analyst in forecasting future profits, allowing for likely changes in costs, taxes, etc. Similar techniques are, in fact, applicable for the analysis of South African gold mining shares which form a homogeneous group with a considerable volume of regular statistical information (see Part IV).

The authors conclude that these computer applications, whilst requiring much further research, offer considerable prospects provided that accurate, reliable and specific input material is available.
Scottish Bankers' Mortality and Marriage Experience, 1950-1966
Authors: Bews R. P. , Limb A. P. , Morrison W. M. , Murray G. M.
Published: July 2016

Synopsis

This paper presents the results of an investigation into the mortality and marriage experience of six widows' funds of the Scottish Banks over the period 1950 to 1966 and compares the results with similar investigations which have been made in the past. Tables of mortality rates have been produced for bachelors, married men, widowers, married men and widowers combined, all males, wives and widows, and marriage rates have been produced for bachelors, widowers and widows.

The examination of the male mortality experience shows a substantial improvement over the previous 1923-43 investigation and in general terms demonstrates that widowers' mortality may be expected to be heavier than that of bachelors which in turn is likely to be heavier than that of married men. Women's mortality also shows considerable improvement but widows' mortality is heavier than wives' mortality at all ages.

The trend towards higher marriage rates and towards marriage at younger ages which was so marked in the previous investigation has continued unabated and the marriage rates for bachelors for the period 1962-66, which have been used for calculating the appropriate monetary functions, demonstrate this trend when compared with the rates for the whole period and with the results of previous investigations.

Monetary functions to enable valuations to be made of widows' funds at 5% interest by the reversionary method are published in the paper together with the results of valuing a model fund by this method using various assumptions. The result of valuing the model fund using the collective method is shown for comparison.
Investments of Insurance Offices: Some Practical Notes
Authors: Murrie Robert
Published: July 2016

When I first began to have to do with an insurance company's investments, I found I had to gather from many quarters the elementary information necessary to enable me to understand in a general way the work I had to do. A great deal has been published since then to remedy this state of matters, but it seems to me there is still room for a treatise of this kind giving the outlines of the subject without going into much detail. Although I have had in view principally the requirements of a beginner, I venture to hope that even those who are further advanced may find something of value in my notes.
Analysed Mortality: the English Life no. 8A Tables
Authors: Nathan Eric B.
Published: July 2016

The earliest mortality tables were constructed from inadequate and relatively defective data. This was obvious to their authors, and the need for fuller, more accurate and more homogeneous data impressed itself upon subsequent constructors of mortality tables, and has materially affected the outlook on mortality tables even up to the present time.

Leaving out of account the construction of the Northampton and Carlisle Tables, we find on the one side a series of mortality tables based upon census returns dating from the English Life No. 3 to the English Life No. 8. These tables were constructed by various methods, usually implying that either the deaths and population or the rate of mortality could be expressed by a finite difference curve.
Notes on graduation
Authors: Buchanan James
Published: July 2016

Few actuaries are required to deal with problems of graduation, and some may be inclined to regard the subject-matter of this paper as highly unpractical; nevertheless it had its origin in questions which presented themselves for solution in the course of everyday work. Some may even be disposed to regard graduation as a kind of juggling with figures, the results of which have to be taken on trust; and they have a certain amount of justification in that the processes are not always fully explained. To satisfy these doubts full details of the methods employed are given in the Appendix, and one or two examples are completely worked out, so that students will be enabled to follow the process from beginning to end.
Some Remarks on Scottish Mortality as Experienced in the Years 1936–38, 1947–49
Authors: Tutt L. W. G.
Published: July 2016

Synopsis

The paper gives a review of some aspects of Scottish mortality experienced in the two trienniums 1936–38 and 1947–49. After an initial consideration of crude and standardized death rates and age-group death rates, mortality rates analysed according to certain grouped causes of death are compared for the two periods of years and for the two sexes and commented upon.

Apart from the desirability of considering recent past experience in some detail an additional purpose of the paper is to make a preliminary investigation in connection with the suggestion recently put forward (J. G. Kyd, T.F.A. 21, page 46) that estimates of future Scottish mortality should be made by considering separately a number of causes of death. In the paper the opinion is arrived at that in general there would appear to be no insuperable difficulties in bringing the suggestion to fruition.
Active Investment Policy Related to the Holding of Matched Assets
Authors: Robertson D. J. , Sturrock I. L. B.
Published: July 2016

Our aim in writing this paper is to show the various ways in which a life office can make a profit by varying or “switching“ its investments from time to time. We shall assume for the sake of simplicity that we are dealing with the life fund of a mutual office which has transacted all its business within the U.K. (i.e. all its liabilities are in sterling) and which does not guarantee surrender values; we shall ignore the effect of any new business which may be transacted in the future.
Life Assurance Underwriting
Authors: Hewat A. Fergus , Penn Colin S.
Published: July 2016

The name of Lewis P. Orr is an honoured one in the history of medico-actuarial literature. It may well be claimed that his paper on “The selection of lives”(T.F.A. 8, page 103) and the revised edition (T.F.A. 13, page 181) were for many years the standard British works on the medical aspects of life assurance underwriting. His earlier paper (T.F.A. 6, page 55) on “Research in life assurance”—submitted to the Faculty in 1911—may, in its consequences, have been even more important because it set the actuaries of the time thinking, and from that, years later, arose the Continuous Mortality Investigation of the Institute and Faculty of Actuaries; but it is with the subject of the two later papers that we are now concerned.
Pension Fund Finance
Authors: McKelvey K. M.
Published: July 2016

Synopsis

Part I of the paper considers in relation to Pension Funds the financial problems so much discussed in recent years in a Life Office context, viz:

(a) asset distribution by date and by class,

(b) financial options against the Fund,

and states the author's conclusions.

In Part II are presented investment statistics and other information relating to a number of actual Pension Funds whose investments comprise 25% of all non Local Government Funds, some £300,000,000 in 1964.

The main conclusions reached in the paper are:

(1) that, normally, irredeemable investments should predominate in a Pension Fund portfolio and include a considerable equity share element;

(2) that financial options exist, but are of far less potential danger to the Pension Fund than to the Life Office;

(3) that, in practice, the Funds investigated are invested shorter than the author would have expected but include a considerable and increasing equity element.
An Experiment in Connection With Life Office Valuation
Authors: Lundie W. , Hancock M. W.
Published: July 2016

Synopsis

The first part of the paper consists of a mathematical analysis of a method of ensuring solvency in an expanding life office investing only in first-class dated and irredeemable securities on the assumption that the market price structure of dated medium to long term securities may change only in such a way that at any time the gross redemption yield for any particular term to redemption will bear a constant ratio to the yield on irredeemables. This leads to a method of valuation of liabilities which is independent of any subjective estimate of the future rate of interest.

The second part of the paper suggests a possible use of this method of valuation in conjunction with the technique of Linear Programming as an aid to the management of a life assurance and annuity fund. This is illustrated by a worked example relating to investment policy, and applications to new business policy and “gearing” are discussed generally.
An Investigation Into the Mortality of Impaired Lives During the Period 1947-1963
Authors: Preston T. W. , Clarke R. D.
Published: July 2016

Synopsis

The paper is a sequel to an earlier paper by Clarke published in T.F.A. vol. 27, p. 20 and it brings up to date the results of an investigation into the mortality experienced by various classes of impaired lives.

For each impairment considered, percentages of actual to expected deaths are shown, the expected deaths being calculated from mortality rates applicable to a corresponding group of standard lives.

In a separate section of the paper, the deaths are analysed by cause with a view to establishing what causes of death are responsible for the extra mortality arising among lives suffering from specific impairments.
The Evaluation of Ordinary Shares
Authors: Marshall J. B.
Published: July 2016

Synopsis

This paper is concerned with the value of ordinary shares to permanent investors whose capital will never be required for any purpose other than investment in stock exchange securites. After tracing the history of ordinary shares over the past forty years, the paper examines methods of valuation which have been suggested by others and in particular extends and attempts to justify one which has been found useful in practice. The qualitative factors to be taken into account in arriving at the valuation are then considered and the paper closes with an expression of hope that more information will be provided, by researchers and others, on these factors in the future.
Maturity (and Other) Guarantees Under Unit Linked Policies
Authors: Wilkie A. D.
Published: July 2016

1. These notes were written after Scott's Faculty paper “A Reserve Basis for Maturity Guarantees in Unit-Linked Life Assurance”, discussed on 17th January 1977, but before Corby's Institute note “Reserves for Maturity Guarantees Under Unit-Linked Policies”, discussed on 28th March 1977; they are a kind of extended written contribution to the first paper.
Graduations of the Data for the Scottish Life Tables (1970-72)
Authors: McCutcheon J. J. , Eilbeck J. C.
Published: July 2016

After completing the work of reference, in which tables were constructed reflecting the mortality of England and Wales over the years 1970 to 1972, the authors received the corresponding data for Scotland. The purpose of the present note is to describe briefly the results of our experiments in graduating these Scottish data. The technical details of the procedures used are virtually identical with those described in reference and accordingly in this paper we give only an outline of our methods. Finally, some comparisons are made between the results of the present work and those relating to England and Wales.
Actuaries and Long-Term Insurance Business
Authors: Thornton M. D.
Published: July 2016

The guide to the profession on this subject first appeared in the Faculty Year Book for 1975-76 and it was discussed at our sessional meeting in February 1976 (and at the Institute's sessional meeting in January 1976). In the time since these meetings there have been changes in the guide and additions to it. No doubt future changes in business conditions in the years ahead will bring forth further amendments. The reasons for devoting another sessional meeting to it at this time are, firstly, to review the manner of its production and to consider what weight it carries, and, secondly, to give members the opportunity of considering the detailed wording of the guide, as distinct from its general intention. The analogy that comes to mind is with an Act of Parliament. The Bill is prepared in a department of government, is drawn up with care and professional skill by parliamentary draftsmen, and receives two readings before the House of Commons when its general aims and intentions are approved: it then moves into the committee stage where, if time permits, every clause is gone over individually to see that it expresses clearly and unambiguously the intention of parliament. It then has its third reading and, if approved, may be expected to go on to become law. The sessional meetings here and in London in 1976 correspond in this analogy to the first two readings of the Bill, and they showed that the intention of the guide and its general terms had the approval of the profession.
Studies of Reversionary Bonus Using a Model Office
Authors: Carr P. S. , Forfar D. O.
Published: July 2016

Synopsis

The paper is the result of work carried out by the authors as members of the Bonus Research Group of the Faculty of Actuaries. The authors designed a computer model of a life office in order to examine the emergence of reversionary bonus under differing conditions. The use of a computer model enabled a dynamic study to be made over many years. The investigations quantified the extent to which the reversionary bonus emerging was affected by the valuation basis, the rate of expansion of the office, the rate of return on the fund, the extent of investment in equities and the office's experience in respect of expenses, withdrawals and mortality. The authors also examined in quantitative terms the extent to which policies would, on the assumptions made, receive more or less than the full share of surplus to which they were entitled as well as examining the size of the valuation estate under differing conditions.
Notes on Actuarial Education
Authors: Gray J. R. , Wilkie A. D.
Published: July 2016

The following notes are intended as an introduction to the Faculty discussion on actuarial education. They are presented by the authors separately and personally, but solely as introductory notes, rather than as actuarial papers which might represent their considered judgement about the nature and purpose of what actuarial education should be. Instead it is hoped that they will stimulate a wide-ranging discussion about all aspects of actuarial education, particularly of course in the context of what the Faculty does or might do in this respect.
The Flock and the Sheep and Other Essays
Authors: Redington F. M.
Published: July 2016

This is not so much a paper as a series of loosely-connected essays and it requires explanation.

For some years I have felt that my generation had an unusual duty to the history of the profession. The first 180 years of actuarial history no doubt seemed eventful enough at the time but they took place against a stable background when interest rates were seldom outside the range 3% to 5%. But since 1945, say, a turbulence undreamed of in those earlier days has become the commonplace of our activities.
Life Assurance in Four European Countries
Authors: Bennet I. R. , Barclay K. J. , Blakeley A. G. , Crayton F. A. , Darvell J. N. , Gilmour I. , McGregor R. J. W. , Stenlake R. W.
Published: July 2016

1.1. The European Economic Community forms the world's largest trading block of countries, accounting for approximately one-third of world trade. Legally it consists of:

—The European Coal and Steel Community (ECSC); formed 1951.

—The European Economic Community (EEC); established by the Treaty of Rome in 1957; and

—The European Atomic Energy Community (EURATOM); established by separate treaty at the same time as the EEC.
The Matching of Assets to Liabilities
Authors: Wise A. J.
Published: July 2016

1.1. The concept of the matching of assets to liabilities is fundamental in matters of finance. In its broadest sense matching is relevant both to the investment of life office and pension funds and to actuarial calculations in relation to those funds.
The Actuarial Background to Investment Policy
Authors: Plymen J.
Published: July 2016

Nearly 60 years ago, the late C. M. Douglas F.F.A. published a classical paper “The Statistical Groundwork of Investment Policy” (T.F.A. 12 p.173).

The main policy consideration, discussed by Douglas, was the extent to which offices should invest in equities. He maintained that funds should only be invested in equities if greater security was therefore obtained. From a study of index numbers covering the period 1924-28 Douglas concluded that share prices were related to the level of business activity i.e. to the progress of the ‘Trade Cycle’; equity prices following the cycle directly, the debenture prices following the cycle inversely, but with a different tempo and interval. If, therefore, an investor could judge the future trend of business activity, a sound investment policy could be pursued.
Reflections on the Roles of State and Occupational Pension Schemes in the United Kingdom
Authors: Low A. J. , Felton P. E.
Published: July 2016

Synopsis

The paper considers the role which the State should play in the provision of pensions to the retired population. The role of occupational schemes is also considered with particular reference to the restrictions placed on that role by the authorities through the requirements for approval for tax purposes and the cost and level of State pensions. The main features of various State pension schemes which have been proposed in successive White Papers are discussed together with their shortcomings and advantages. The White Paper “Better Pensions” and its implications for the pensions industry are then considered in greater detail.
The Measurement of Investment Risk.
Authors: Clarkson R. S.
Published: July 2016

1.1 In the paper “Improving the Performance of Equity Portfolios” by Clarkson and Plymen (presented to the Institute of Actuaries on 25th April 1988) the authors concluded that Modem Portfolio Theory methods made no contribution whatever to improving the performance of equity portfolios and suggested that attention should be paid instead to the application of fundamental analysis, which—if carried out by skilled and experienced analysts—should lead to higher expected returns. The only practical application of techniques related to Modem Portfolio Theory appeared to be in the area of Index Funds, where it is desired to track the performance of a chosen index as closely as possible.