The paper sets out to develop a method for measuring the effect which changes in capital value of securities may have on premiums and asset shares. It is shown that any such method will involve an assumption as to allocation of assets to particular sections of business, and to particular policies within those sections of business. Different approaches to the allocation of assets are discussed as a preliminary to the development of formulae which take account of changes in capital value of both fixed interest stocks and equities.

Examples are given to illustrate the accumulation of asset shares in funds of different composition under varying investment conditions, on the basis of a “unit trust” approach to the allocation of assets.

The paper concludes with some comments on surplus distribution under individual and group with-profits policies.