This paper describes current asset share techniques, examines alternative asset share philosophies and discusses practical issues associated with the calculations. Alternative approaches to smoothing payouts using asset shares are examined. A financial management framework is described which provides information on the financial position of a with-profits fund. A central part of the framework is the concept of risk-based capital. The factors to be considered in determining risk-based capital are described and examples given of the possible capital needs of with-profits business.

The paper describes the main features of the market in traded endowment policies (TEPs) and the role of the main players in the market. The controversial, and related, issues of how to put a value on a traded endowment policy and the information given to investors are examined. The issues facing life offices whose policies are traded are discussed.

This paper addresses one of the fundamental issues faced by offices in the transacting of with-profits business, namely, the provision of equity-related performance along with maturity guarantees that increase over the lifetime of the policy. The approach commonly followed of using capital to cover the office's investment mismatch risk is considered from an individual policy viewpoint, and, through stochastic modelling, the degree of security represented by different reserve levels identified. An alternative approach using derivatives to provide similar levels of security is then presented and the range of policy proceeds resulting from the two methods compared. While it is recognised that the latter approach may have limited application in practice, the ideas presented could form the basis of a new approach to pricing guarantees under with-profits business that would be consistent with the pricing of current derivative-backed guaranteed products.

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.