Dear Mr. Henney

I refer to your letter dated 7 October 2002 addressed to the Chairman.

In your letter you quote selectively and somewhat misleadingly from Article 65 of the Society's Articles of Association. You presumably have access to a copy of the full text of that Article, so shall not repeat it here.

The Directors currently require the Appointed Actuary to undertake an investigation as specified in Article 65, including a valuation of the Society's assets and liabilities, on an annual basis. The "report" referred to in Article 65 is the Director's Report to Members as requirr4ed by Article 11. The results of the valuation are reported to Members in the Director's Report contained in the Annual Report and Accounts. The information that underlies this report also underlies the returns to the FSA. The most recent such report is on page 13 of the Annual Report and Accounts 2001. The Accounts themselves and the Notes on the Accounts (contained in the Annual Report and Accounts) give further details of the Society's assets and liabilities.

The Board also, from time to time, asks for other reports from the Appointed Actuary but these have not involved a formal valuation of the Society's assets and liabilities and are not within the meaning of Article 65. There is therefore no requirement for a formal report to Members.

In your letter you mention "future income". I can confirm that when placing a value on assets no credit is taken for future income, although future income is taken into account when valuing liabilities.

I trust that the above explains the position and demonstrates that the Directors have not failed to provide reports required by the Articles.

Yours sincerely,

Tony McGarahan
Chief Communications Officer