A cash flow model is proposed as a way of analysing uncertainty in the future development of a general insurance company. The company is modelled alongside the market in aggregate so that the impact of changes in premium rates relative to the market can be assessed. An extensive computer model is developed along these lines, intended for use in practical applications by actuaries advising the management of genera1 insurance companies. Simulation methods are used to explore the consequences of uncertainty, particularly in regard to inflation and investments. Some comments are made on the role of actuaries in general insurance. Alternative approaches to describing the behaviour of an insurance firm in the market are considered.

The paper traces the history of the development of a with-profit system for a specialist unit-linked office. The marketing problem, to which this was the chosen solution, is discussed and a number of possible future developments are then considered. The second half of the paper is devoted to discussion of the question of matching assets and liabilities for the range of products developed. Although the paper deals with developments in a particular office the authors' intention is to provide a different perspective on the problems associated with conventional with-profit business which will be of more general interest.

The paper reviews the mathematical models of transmission of infection that have been put forward for representing the spread of HIV infection and AIDS. It describes and compares the main models that have been proposed and thereby provides some guidance on how such models might be constructed and utilised. There is also discussion of the importance of constructing such mathematical models of transmission of infection which further our understanding of the transmission dynamics of the epidemic and help to identify important epidemiological parameters and their likely influence on the epidemic's course.

The paper comments on the estimation and sensitivity of the retail price inflation component of the stochastic financial model proposed by Professor Wilkie. Statistical tests provide evidence of nonindependence and non-normality of residuals, suggesting non-linearity. However, it is noted that the model is most sensitive to the assumption of long-term mean inflation.

The process of updating company classifications continued.

Seventy Index constituents were replaced during 1989, mostly as a result of takeovers, not quite a record. Only 46 replaced them, reflecting the difficulty in finding suitable new non-industrial constituents. The Mining Finance group was discontinued, but Engineering–Aerospace and Water were introduced. Shipping & Transport was renamed Transport.

J.I.A. 116. Part III

Page 556, equation (31) and the one thereafter should read: