NATIONAL MUTUAL LIFE ASSOCIATION

Dominion, Volume 16, Issue 171, 7 April 1923, Page 11

NATIONAL MUTUAL LIFE ASSOCIATION

SEVENTEENTH ACTUARIAL INVESTIGAION. An extraordinary general meeting of policy holders in the National Mutual Life Association of Australasia, Ltd., was held at Melbourne on March 21, for the purpose of receiving the report by the actuary on the seventeenth investigation. The report covered the three years’ period to September 30 last. The chairman, Mr. A. Newell, in presenting the report to policyholders,, said: —“The chairman of these meetings has always had a pleasant duty to perform in presenting the report of the association’s business. Almost invariably it has been a record of progress and development; sometimes the rate of progress has been checked by conditions which were beyond our control, but we have never gone back. The report which I will presently ask you to adopt shows that during the last three years we have surpassed all past records. At our annual meeting we have had particulars of each year’s transactions, but the significance and result of those transactions could not be known accurately until the value of the association’s obligations under the policies that have been issued w as ascertained. We have now before us the results of the valuation as at September 30 last, and a summary of the whole of the business since the valuation which was made at September 30, 1919. With your permission, I will comment briefly on the principal items in the report. Our income during the three years amounted to £7,582,768. of which £5,289,523 was for premiums on policies, and £2,293,245 was for interest and fees. The total was £l,774,487 greater than the income of the previous period. The interest is equal to a return of £5 ss. 7d. per cent, per annum of our total funds during tho period, and this rate, calculated on the amount of tho assurance fund at September 30, 19—2, represents an annual income of more than £295,000 in excess of tho amount which it was assumed in the valuation the funds will yield. The amount of interest received, you will notice, is nearly twice as much as the amount that was required to pay claims under policies. Tho payments to members under their policies amounted to £2,713,643, or £73,118 less than the amount paid from 1916-19, and the amounted added to the assurance fund was £4,063,290, winch is £1,666,494 more than the corresponding item shown in the 1919 report. The income ■ of the three years is equal to the total income of the association durii g the first 28 years of its history, and the amount added to the funds is cflua to the accumulations. of . the first. do years. The new policies issued during the period amounted to £17,012,338. This is £3,550,000 more than we have issued in any /similar, period. the amount spent in obtaining this business represents more than half Oi the total expenses. This is owing to the method which is generally adopted of paying the whole cost of new business during the first year of a policy. It has often been asked how much new business can a life office transact with advantage to its members. No definite answer can be given to this question, but it is certain that a proportion of new business carefully selected and obtained at .a reasonable cost is essential to maintaining the healthy condition of an office. “There is a reference in the actuary’s report to the mortality experience of the three years to which I would call your special attention. After five years of war and pestilence v® have had three years free from any disturbing influence, and the result is shown in the amount of claims on our Consolidated Revenue account. I'rom an amount that was ™comfnrtabb close to the expectation in IM9 have dropped to an amount that is do per cent, below, so that with a much larger amount at risk the claims are £429,585 less than they were three vears a£O . “The law of mortality works very surely, and although we may have fluctuations from year to year, and under exceptional conditions, as we have seen the fluctuations may be serious, in the long run the law will pievail. We, therefore, cannot hope tor a continuance of the remarkably favourable experience of the last three years. The result of our operations is given in a condensed form on page fifteen of the report. / rh ®./ a J} iatl ° balance-sheet shows that while the assurance fund at September 30, LJdd. amounted to £16,587,659, the net value of the liabilities at that date was £14,882,160, so that there was a surplus of £1,705,498. This may- be stated in another way. During the three years the assurance fund bad been increased by £4,063 290, and the liability has, during tho same period, increased Ly £2,357,791. The Actuary recommends that £250,000 of this surplus should be reserved for what is called, for want of a better form, suspended mortality.’ The reason for this is obvious from what I have said about our recent experience, and the directors had no hesitation in adopting tbe recommendation. Tho amount to be divided amongst the policyholders £1,455,498—is £666,011 more than the amount that was divided three years ago, and it is sufficient to provide reversionary bonus w additions to tho sums assured under policies ot over £2,500,000. . “We cannot claim that this very satisfactory position is the result of the last three years’ work. We are reaptng the result of the. conservative policy that has boon followed in tho management of the affairs of the association for many years. , “A perusal of the report and schedules will enable members to appreciate th© matters that I have touched very lightly; any elaboration of them on this occasion would be out of place. But there is a significant fact disclosed by tho information on page nineteen. You will see that the total or tho premiums received on policies that are now in force is less than the amount of the assurance fund; in other words, wo hace now in hand more than tho total premiums that have been paid by tho present policyholders. Since tbe association was established wo have paid to policyhold- 1 ' ers £14,999,335. , ± . . “This is the first opportunity of informing tho members direct of the completion of an important transaction by the association. Since our last annual meeting wo have arranged to reinsure the whole of tho Australasian business of tho Equitable Life Assurance Sotidy of the United States. Announcements have ' appeared in the Press which contain all the important facts, and I can only add that the transaction is a satisfactory, one for tho members of the association. “Tho bonus certificates showing the reversionary bonus additions to their policies will be issued to members on Thursday next week. “Hitherto the association has issued bonus certificates only at tho end of each triennial period; it is intended henceforth to issue to members after tho close of each year of a triennium certificates showing the intermediate bonuses allotted to policies for the report was adopted.—(Published by arrangement.)