Closure of the fund to new business is a strategic option that is not usually considered as a part of the day-to-day running of a life assurance company. The paper explores certain circumstances in which it can be appropriate to consider it, though in the Working Party's view consideration of the closed fund alternative normally arises as a matter of course only in the context of demutualisations, and then as an indicator of the potential value of membership rights.

The topic is discussed in terms of legal, regulatory and professional aspects, and the profession is invited to consider providing more specific guidance for Appointed Actuaries whose companies are faced with demutualisation proposals. A number of practical aspects of operating a closed fund are outlined. The high-level financial considerations are illustrated by reference to a hypothetical case, and the perspectives of directors, independent and Appointed Actuaries and others are considered.

Several recent examples of demutualisations where the closed fund alternative was considered are summarised in appendices, and some examples of closed or virtually closed funds are cited.

The Presidential Address covers various aspects of the actuarial profession; past, present and into the future. It considers mutual life companies and their current situation. There needs to be improved education in investment and more actuaries should be involved in this area. The codes of conduct and disciplinary procedures of the profession have to be kept under constant review. The international actuarial scene is of great importance, with mutual recognition of qualifications, the various groupings of actuaries and of actuarial associations world wide and the expansion of the profession into further countries all part of current activities. Various alternative options for the future of the profession in the U.K. are suggested.

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 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.