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The Actuary The magazine of the Institute & Faculty of Actuaries

Afford every income stream

The, presumably coincidental, juxtaposition in your March issue of letters about events at Equitable and attempts to buy the Equitable archive has given me an idea. The Library Committee should consider acquiring more recent documents relating to contributions by Equitable to actuarial thinking. An obvious example is an original copy of the ‘side letter’ which Equitable introduced into reinsurance practice in 1999. Details of this innovation are still available on the FSA website at www.fsa.gov.uk/pubs/final/headdon_1jun04.pdf. It was used by the actuary of Equitable to reduce his published liabilities by almost £800m while the corresponding liabilities of the reinsurer were capped at £100m; in its own way as remarkable an achievement as those of Dodson or Morgan.

More seriously, the profession must resist any calls to retreat to the state of denial which characterises so much of the letters from Messrs Headdon and McBride. How, for example, after what has happened in the last five years, can anyone still argue that a with-profits fund (at least one invested in equities with guarantees it is intended to honour) can be run without an estate or other risk capital? If we are foolish enough to take such a step backwards then I fear that, in a few years time, acquiring historical documents may be the only role left for actuaries.