Royal Charters incorporating academic and professional bodies have usually been granted as soon as the organization could prove itself worthy of the honour. Why, then did it take the Institute nearly 40 years to acquire its charter? The story has been told in R.C. Simmonds's The Institute of Actuaries 1848–1948 but bears retelling here.

The initial object of this paper was to make general observations on the draft Insurance Companies (Winding-Up) Rules 1983 which were circulated for comment and would be made under Section 59 of the Insurance Companies Act 1982. They concern the identification of general and long-term assets and liabilities, and the evaluation of policyholders' claims, in a winding-up. The wider objective is to review insolvency law generally in relation to long-term insurers and in particular the interaction between the general law concerning companies and the specific law relating to insurance companies. This review leads the authors to set out the case for a radical new approach.

1.1. Since its formation in 1974 the General Insurance Study Group has been considering various aspects of the solvency of general insurance companies and a number of papers have been produced for discussion at GISG Seminars. These have been deposited in the library at Staple Inn but have not been presented or made available to a wider audience in the profession.

1.2. At the Dublin Seminar in October 1981, three working parties reported on different aspects of solvency: technical risks, investment risks and reinsurance. These papers covered a wide field but lacked a coherent theme. During 1982 some work was set in hand to draw the threads together. This was not completed for the Stratford Seminar in November 1982 but there was by that time much interest in the Finnish solvency study which had recently been presented to the ASTIN Colloquium in Liège.

The level of benefits paid to members of occupational superannuation schemes will depend on the level of contributions made by the employer and employee, the investment earnings received by the accumulated assets and the expenses incurred in the management of the scheme. However, this third factor has been ignored by previous studies into occupational superannuation, even though higher expense levels will naturally cause reduced benefits for a given level of contributions and investment return. In this respect, cost efficiency within the superannuation industry is an important criterion in assessing the efficacy of employer-sponsored occupational superannuation.

1.1. Multiple state life tables can be considered a natural generalization of multiple decrement tables in the same way as the latter can be considered a natural generalization of the ordinary mortality table. The essential difference between a multiple state model and a multiple decrement model is that the former allows for transitions in both directions between at least two of the states, see for example Haberman (1983, Fig. 2). whereas in the latter, transitions between any pair of states can be in one direction only, if they are possible at all; see for example Haberman (1983, Fig. 1). Multiple state life tables, unlike mortality tables and multiple decrement tables, are not included in the professional actuarial examination syllabuses in Britain and have only rarely been mentioned in the British actuarial literature, one example being C.M.I.R. (1979, Appendix 2). Despite this, such models have been included in the actuarial examination syllabuses of other countries for several years, for example Denmark, and would appear to have obvious actuarial applications, for example sickness insurance. Dr Haberman's paper (J.I.A. 110) on the subject of multiple state models is to be welcomed since it provides both an introduction to this subject and an interesting application. The approach to the study of multiple state models put forward by Haberman (1983, §3) is characterized by the use of flow, orientation and integration equations. For brevity we shall refer to this as the FOI-approach to multiple state models. The purpose of the present paper is to put forward an alternative approach to multiple state models. This approach uses the forces of transition, or transition intensities, between states as the fundamental quantities of the model. For brevity we shall refer to this as the TI-approach.

1.1. This paper is supplementary to another by the same author on the subject of matching. It describes the mathematical analysis of the following problem.

1.2. We are given:

1. a pattern of expected future cash flows under a pension scheme or insurance contract;

2. a set of investments available for purchase; and

3. a model of the future behaviour of investment conditions.

What set or sets of available investments would provide the best match against the given liabilities in order to minimize any likely surplus or deficiency on completion of the liability cash flows?

In this paper, we examine the hedging performance of the new FTSE 100 Share Index. First, we reconstruct a back-history of the monthly and daily index values using the London Share Price Database. Then we analyse the statistical characteristics of the Index, comparing it with the FT–Actuaries All Share and FT Ordinary Indexes. Finally, we examine the sources of undiversification within the FTSE Index. We conclude that the market is likely to track the FTSE Index to within a close tolerance, and that the residual tracking error is attributable partly to sector imbalances, but more importantly, to imbalances in exposure to smaller capitalization stocks.