The subject of Analysis of Surplus is often approached by the student with unwarranted misgivings, but it is hoped to show in this paper that the main requirement is a clear understanding of the valuation processes and assumptions.

Every valuation is based on a series of estimates and assumptions and it is a natural sequence that, at the end of a valuation period, these should be tested to see to what extent their adoption has been justified by experience. It can therefore be said that Analysis is the corollary of Valuation.