The European Economic Community (Common Market) was established by the Treaty of Rome signed by six countries, namely, Belgium, France, Germany, Italy, Luxembourg and the Netherlands, in 1957.

Many of the eleven basic aims of the Treaty have some bearing on insurance business. The free movement of persons, services and capital is of the greatest technical interest to insurers but the measures designed to promote the economic growth of the Community which will include the expansion and improvement of capital markets could be of even greater interest—particularly to life assurers. Another aim of the Treaty, viz. to ensure fair competition within the Community, could act as a constraint on the introduction of liberalizing measures.

The general programme for the progressive establishment of the Common Market over a transitional period of 12 years (extended if necessary) included a specific timetable for the introduction of freedom of establishment and freedom of services in respect of insurance transactions. The implementation of this programme as it concerns insurance has fallen into arrears and only one of the five directives which were scheduled has so far been promulgated. Nevertheless, the achievement of the aims of the Treaty of Rome must eventually result in the gradual harmonization of legislation affecting insurance business within the member states. Chiefly because of the need to avoid any distortion of competition, the measures introduced are likely to apply to all insurers within the E.E.C. irrespective of whether they transact business in one or more member states.

It is premature to consider in detail the likely terms and conditions of the E.E.C. legislation as this is still a long way off. Insofar as the present pattern of insurance control legislation of most E.E.C. countries is more restrictive—particularly for long-term business—than in the United Kingdom, any short-term solution for harmonizing legislation would seem likely to involve British companies in more stringent rules. It is hoped that the E.E.C. will take into account the outcome of the discussions on similar issues which have taken place over the last decade within international organizations such as the Organization for Economic Co-operation and Development and the Comité Européen des Assurances on which the United Kingdom is represented. E.E.C. thinking may also be influenced in the direction of the progressive liberalization of insurance control legislation by the record of life assurance business in the United Kingdom and by the need to encourage the development of capital markets to which life assurance is an important contributor as a source of long-term and regular savings. Thus the ultimate pattern of E.E.C. legislation may well reflect the British system of freedom, provided such a system is well presented within the E.E.C. negotiations. Generally, problems for the British actuary will arise from the imposition of new rules within the E.E.C. not only for insurance transactions but for the many other commercial transactions with which the actuary is professionally interested as advisor or participant.

Special areas of long-term business such as pension schemes; life reassurance; equity-linked contracts and private sickness insurance are described. Last but not least, in connexion with the introduction of freedom of mobility of labour, it may be necessary to consider to what extent actuarial qualifications earned in another member country can be recognized as enabling an actuary to practise in the United Kingdom.

The search for functions which describe how mortality varies with age is an old one. Over the past two decades demographers have developed model life tables based on the structure of relations among mortalities in different populations rather than explicit expressions of age. The earlier work was analytic and empirical using techniques of statistical regression but more recently functional models have been constructed. These developments are described with particular concentration on the logit relation families of curves.

Some uses of the model life tables in demography are examined such as mortality projections, the dynamics of age structure and estimation from the limited data of developing countries. The implications of the logit system for certain of the “classic” speculations are considered—the span of life, whether a generation carries its own mortality with it and the accumulation of the unhealthy at older ages with saving of life at the younger.

Three reports made to the International Congresses of the European Federation of Financial Analysts Societies on the development of investment analysis by computer are discussed in Part I. The 1966 and 1968 reports were mainly concerned with processing investment statistics, pricing individual shares or selecting portfolios by mathematical means. By 1970, however, some of the more elaborate schemes for pricing equities and selecting portfolios had been abandoned, more emphasis being given to data processing of investment statistics and to analysing by computer special categories of investments where a considerable volume of regular investment statistics are available and extensive calculations are required.

The authors then proceed to describe two practical computer applications dealing with specialised classes of share. Part II deals with the application of simple statistical techniques to investment trust shares in an attempt to select those that are “cheap” or “dear”. The suggested method, tested for the first nine months of 1971, showed that the shares recommended as “buys” recorded a gain of 4.1% better than the investment trust index, whilst the “sales” underperformed the index to the extent of 6.8%.

The finances of the television rental companies have distinct analogies with those of a life assurance business. TV sets have a life span like a mortality experience and their installation costs involve a new business strain; Part III demonstrates how a computer model of a TV rental company can be used to assist the analyst in forecasting future profits, allowing for likely changes in costs, taxes, etc. Similar techniques are, in fact, applicable for the analysis of South African gold mining shares which form a homogeneous group with a considerable volume of regular statistical information (see Part IV).

The authors conclude that these computer applications, whilst requiring much further research, offer considerable prospects provided that accurate, reliable and specific input material is available.

The lecture describes how, in 1744, a fund to provide for the widows and children of the Ministers of the Church of Scotland and of the professors of the Scottish Universities came to be established and examines the calculations of an actuarial character on which its provisions were based. Some biographical details are given about the men chiefly responsible for setting up the fund, namely Rev. Robert Wallace, Rev. Alexander Webster and the mathematician Colin Maclaurin. Other work done by Wallace and Webster in the field of population statistics is also outlined.

This paper presents the results of an investigation into the mortality and marriage experience of six widows' funds of the Scottish Banks over the period 1950 to 1966 and compares the results with similar investigations which have been made in the past. Tables of mortality rates have been produced for bachelors, married men, widowers, married men and widowers combined, all males, wives and widows, and marriage rates have been produced for bachelors, widowers and widows.

The examination of the male mortality experience shows a substantial improvement over the previous 1923-43 investigation and in general terms demonstrates that widowers' mortality may be expected to be heavier than that of bachelors which in turn is likely to be heavier than that of married men. Women's mortality also shows considerable improvement but widows' mortality is heavier than wives' mortality at all ages.

The trend towards higher marriage rates and towards marriage at younger ages which was so marked in the previous investigation has continued unabated and the marriage rates for bachelors for the period 1962-66, which have been used for calculating the appropriate monetary functions, demonstrate this trend when compared with the rates for the whole period and with the results of previous investigations.

Monetary functions to enable valuations to be made of widows' funds at 5% interest by the reversionary method are published in the paper together with the results of valuing a model fund by this method using various assumptions. The result of valuing the model fund using the collective method is shown for comparison.