At a time when attention is focused upon our foreign trade and when there is widespread recognition of the need to pay with goods and with services for the food and raw materials we are compelled to obtain abroad, there is much to be said for an appraisal of the overseas activities of British life assurance companies and for a discussion of the major problems calling for immediate attention. The subject was last dealt with in a paper read before the Institute by Mr W. F. Gardner in 1935, but the intervening years have been not uneventful, and today the accent is somewhat changed, although it will be found that the previous paper deals with many of the problems confronting us now.

This paper is submitted in the hope that it will assist members who are not actively concerned with investment matters to obtain a reasonably clear picture of the Stock Exchange and how it works.

The main object of the Stock Exchange, as an institution, is simply to provide a market for stocks and shares, i.e. rights to interest or dividends. Such a market has been in existence in one form and another since the latter part of the seventeenth century, and is virtually a necessity in the modern capital structure. Without it the investor would be loth to lock up his money in a joint-stock undertaking, and, if he did, would have difficulty in assessing the value of his holding at any time. Moreover, he would have little to guide him in making the best use of his capital and, on the other hand, companies requiring funds (to say nothing of the Government) would find it hard to guess the best terms for a new issue.

In advising on the apportionment of a fund, an actuary is faced with practical problems of admitted difficulty. The following notes are an attempt to discover exactly what these problems are, and to determine the methods of approach most likely to lead to a satisfactory solution.

Trustees looking after a settled fund have a different attitude to investment from that of persons controlling the investments of a life assurance fund. The funds of a life office are normally increasing; in such a case it is easy to see that the object of investment policy is to secure accumulation at as rapid a rate as is consistent with safety. Changes in the portfolio can be considered which do not necessarily result in an immediate increase in current income. The securing of a capital profit or the avoidance of a prospective capital loss by a sale and reinvestment may be a valuable source of strength. Trustees, on the other hand, cannot ignore the importance of a high level of current income, for a trust fund is normally invested to produce income for disbursement, and there is a vital distinction between trust ‘capital’ and ‘income’.

One of the principal problems of demography is that of comparing the mortality and fertility of different populations or of one population at different periods of time. This note defines and discusses briefly some of the measures which have been used for this purpose.

Notation

aPx number of persons in age group x in the population being considered (the ‘actual’ population).

amx death-rate in age group x in the actual population.

sPx,8mx the corresponding number of persons and death-rate in a population chosen as standard (the ‘standard’ population).

aM crude death-rate in the actual population.

sM crude death-rate in the standard population.

tx number of ages included in age group x.

The standard population may, and in fact usually will, be an actual population in the sense that it is a population which existed at some particular time.