The statutory Minimum Funding Requirement (MFR) introduces fundamental change to the funding of pension schemes in the United Kingdom. While only a minority of schemes will actually be affected materially in terms of actual contributions or benefits, taken over a period of years, the influence of MFR will be much more widely felt. This is because the MFR is an absolute standard to be met, whereas long-term funding targets for ongoing schemes are, at least up to a point, optional and adjustable. The paper discusses the difference between MFR and long-term funding and suggests a variation on traditional actuarial methods to control explicitly the risk of MFR failure, based on a combination of traditional methods and the theories underlying asset/liability modelling. The paper also discusses the implications for pension expensing and communication of funding levels.

This paper develops the Daykin et al (1994) asset/liability model to examine specifically the effects of different reinsurance programmes on the capital of a direct insurance company. By modelling the gross premiums and claims separately from the impact of reinsurance on them, it is possible to examine directly the effects of different reinsurance programmes on a company's expected performance just as easily as changes in asset mix or business volumes. The paper goes on to discuss the necessary assumptions to be built into such a model, and then gives a worked example. The emphasis of the paper is on management reporting rather than on mathematical detail.

Traditional life insurance accounting standards rely on various types of book and cost values, the result being that the income and balance sheet statements do not necessarily give a true and transparent picture of the result of the life business. As examples, assets are typically stated at a mix of cost, current and amortised cost values, whereas life insurance provisions are calculated according to the approved technical basis.

In this paper, it is suggested that this deficiency can be corrected by preparing life insurance accounts at current value. The proposed method implies that the life insurance provisions shall amount to the present value of the company's net liabilities to the policyholders including a provision for future bonus distribution. Moreover, any unrealized investment reserves are thrown into light, and it is shown how a bonus equalization provision at current value may serve as a key indicator of the financial strength of the company.

The method has been designed primarily for the Danish market, but aspects of the method should be of relevance more widely.

Finally, the results are illustrated by a number of numerical examples.

This paper examines the political economy of regulation, reviewing market socialist, neo-classical and public interest approaches to regulation and analysing the development of financial services and insurance regulation in these frameworks. However, the paper suggests that these approaches do not capture properly many of the features of a market and the behaviour of regulators. Public choice theory is discussed, and it is concluded that there has not been significant capture of the regulatory process by interest groups. Austrian economics is proposed as a possible framework within which to analyse markets and regulators. It is concluded that there is prima facie evidence to suggest that the Austrian view of the market is realistic and that regulation in insurance markets can have unforeseen and undesirable effects. The author also concludes that, until 1970, insurance regulation did not deviate from principles which are appropriate if either a public choice or Austrian view is taken. However, the Financial Services Act 1998 and the Pensions Act 1995 do deviate from those principles.

This note marks 10 years of publication of the FT/S&P World Indices. Equity indices are given for 28 countries, 11 continental groups, and the whole world, covering the Developed World and an increasing number of those in Emerging Markets.