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The Actuary The magazine of the Institute & Faculty of Actuaries
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Unbelievable value

Victor Hughff (News from the industry, May) writes:

‘Simply plotting a graph of the All-share Index from the end of 1996 to January 2003 is enough to show how impossible it is to take seriously the suggestion that market prices on a particular day, or month, or year, can be used for assessing the ability to meet liabilities maturing ten, 20, or 50 years away.’

I have reproduced the plot below. Throughout that period I have advocated the use of market prices when assessing the ability to meet liabilities. Victor’s personal incredulity does not tempt me to switch to his unspecified alternative methodology.