1.1.1 The Faculty of Actuaries' Marketing Research Group was set up in May 1988 to research areas of interest to that new breed of Fellow, the “Marketing Actuary”.

In the initial meetings two general areas of interest were identified—namely the marketing of the actuarial profession, and the marketing of financial services products.

Whilst the group has spent time on both subjects this first paper is concerned with the marketing of the actuarial profession.

1.1.2 We felt that the starting point for a marketing audit of the profession was to conduct research amongst the members. In addition we have investigated the coverage achieved by the profession in the media, and looked into developments in North America, including a survey which ranked the actuarial profession against other forms of employment.

The authors discuss the investment of pension and other institutional funds, stressing a theme of investing to meet liabilities. Their aim is to stimulate debate by actuaries and the investment community, leading to the development of better approaches to pension fund investment and its monitoring.

The first part of the paper considers the matching of assets to liabilities, concentrating on a major principle applicable to actuarial valuations where assets and liabilities are mismatched.

The paper goes on to consider principles of institutional investment and includes discussions of the meaning and measurement of risk, the setting of investment objectives, decision-making, asset allocation and investment performance monitoring.

1.1 This paper owes its existence on two counts to the late Jim Souness whose term of office as President of the Faculty coincided with the bulk of our research. Firstly, as President, he encouraged Faculty research groups to be active and to produce material worthy of sessional papers. More directly it was the late President who funnelled our general investigations of life office management (which had continued after the Group's 1987 sessional paper) towards the issue of demutualisation.

There have been several notable demutualisations of life offices in recent years, yet there is little published research in the UK other than case studies into the actuarial issues which these restructurings raise for the profession. Furthermore much of what has been published pertains to overseas regimes not subject to UK-style regulation. However at the time of writing we are aware that another paper (reference 20) was being written concurrently, and it relates specifically to the UK.

The paper firstly examines the way in which U.K. mutuals operate and the forces which are leading mutuals to consider demutualisation. Demutualisation is normally accomplished by a Scheme of Transfer under Section 49 of the Insurance Companies Act 1982. The role of the directors and actuaries is discussed, including the impact of the Institute's latest Guidance Note (GN15).

The protection of policyholders' reasonable expectations, the value of membership rights and the basis of dealing with any orphan surplus are the central problems. The paper examines them in the context of both the open fund and closed fund situation and shows how they may be resolved.

A simple model is used to project the financial position of both an open and closed fund in a demutualised company. The relative advantages and disadvantages of each indicate that different courses of action may be appropriate for mutuals in differing financial positions.

The use of the Z-method for finding the probability of survival of at least r lives, and the corresponding pure endowment and annuity functions, is well known in acturial circles. (See, for example, Neill [1; section 7.4].) The purpose of this note is to show that similar formulae apply to assurances (including varying, temporary and deferred assurances).

1.1 The paper was prepared by the authors as members of the Pensions Research Group of the Faculty of Actuaries. It covers the major factors influencing the design of pension schemes during the last decade. This period saw an unprecedented level of legislation on pensions, much of it with far reaching consequences. In the final sections of the paper some suggestions are put forward as to the likely form of benefit design in the 1990s and beyond.

This paper describes how the system of life office taxation in the U.K. impinges on the amount and the emergence of life assurance business profit. It considers how to allow for taxation in the assessment of product profitability and company valuation. Finally, the paper provides a brief overview of the methods of taxation of alternative savings products and of tax systems in the European Community, with a view to drawing conclusions as to possible future changes to the framework of life taxation in the U.K.

In giving their advice, actuaries form part of a complex series of interlocking relationships – pensions advice must take account of the Trust Deed, the Faculty's and the Institute's Rules of Professional Conduct and the law.

The law is paramount as interpreted by judges. Lawyers and judges have little difficulty in investigating transactions of many years ago – what was deemed normal and proper by actuaries then could well not be perceived by the court as reasonable – either then or now. The fact that everyone does it may be a defence against negligence – or it may not.