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are now placing greater emphasis than in 1969 on controlling the money supply and support for the gilt-edged market was withdrawn when the Bank of England published Competition and Credit Control in May 1971.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.

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.