The object of this commentary is to indicate the fundamental principles underlying the selection of property investments from the point of view of an insurance company. It is, however, essential first to examine the phraseology of real property, with its legal background, before we can distinguish between the various types of property and the degree of security afforded by each type. In the time at our disposal, we must of necessity confine ourselves to the basic elements of the subject, and make no attempt to deal with war-time legislation or present prospects of changes in legislation.

By currency stabilization we can mean one of two things. We can mean either the stabilization of the internal value of a currency—the quantity of goods and services that a unit of it will purchase inside the country concerned—or the ‘stabilization’ of its external exchange value in terms of the quantities of the currencies of other countries that it will purchase.

The internal and external values of a currency are of course closely interconnected. There was a time, when the gold standard was working more or less smoothly, when the fixity of foreign exchanges was taken for granted, and discussion of currency stabilization was mainly concerned with the desirability and possibility of maintaining a stable internal price level. Now, however, as a result of the shrinking of international trade in the Great Depression and the consequent bedevilment of the exchanges in nearly every country, the focus of attention has shifted, as the Keynes and White plans clearly show, to the problem of achieving and maintaining equilibrium in the external balance of payments of the different countries while avoiding drastic exchange restrictions or, alternatively, wide and erratic fluctuations in their exchange rates.

The widespread practice of making bonus reserve valuations for publication or internal purposes has brought to light a number of points which do not arise when surplus is being analysed following a net premium valuation. The following notes have been prepared with a view to their elucidation and are based on a slightly different method of treatment of the problem from that usually employed. The revenue account and corresponding valuation account are brought side by side, and it is shown that in the main surplus is the difference between the corresponding items. The surplus is analysed symbolically, and finally the whole operation in symbols is shown to give a complete reconciliation. The symbols which are not defined by their context are explained in Appendix A.

A particular method of analysis has been followed but it is not claimed as the ideal; the individual may choose to vary the method, but so long as correct principles are maintained the surplus will be traced—which is the object sought.

The actuary's ideas on statistics tend to be biased in the direction of Life Office statistics. It may therefore be useful to set down a simple use of statistical methods which has been adopted in industry and which was the subject of a lecture to the Students' Society some two years ago, viz. Statistical Quality Control. Where the mass production of articles is employed, various systems of inspection aim at watching the quality of the product to prevent unsatisfactory work being passed on to the consumer or to a later stage in the manufacturing process.