NATIONAL MUTUAL LIFE ASSOCIATION

Evening Post, Volume CV, Issue 82, 6 April 1923, Page 3

NATIONAL MUTUAL LIFE ASSOCIATION

SEVENTEENTH ACTUARIAL

INVESTIGATION.

An extraordinary general meeting of policy holders in the National Mutual Life Association of Australasia, Ltd., was held at Melbourne on 21st March, for the purpose of receiving the report by the actuary on the seventeenth' investigation. The report covered the three years' period to 30th September 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 aßk you to adopt shows that during the last three years we havo surpassed all past records. At oar 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 tha value of the association's obligations under the policies that have been issued was ascertained. We have now before us the results of the valuation as -at 30th September lastj and a summary of the whole of the business since the valuation which was made at 30th September, 1919. With your permission, I will comment briefly on the principal items in the report. Our income during the three years amounted -to £7j582,768, of which £5,----289,523 was for premiums on policies, and £2,293,245 was for'interest and fees. The total was £1,774,487 greater than the income of the previous period. The fntere«t is equal to a Tetuvn of £5 5s 7d per cent, per annum of our total funds during the period, and this rate, calculated on the amount of the assurance fund at 30th September, 1922, represents an annual income of more than £295,000 in excess of the 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. The payments to members under their policies amounted to £2,713,643, or £73,118 leas than thei amount paid from 1916-19, and the amount added to the assurance fund was £4,063,290, which is £1,666,494 more than the corresponding item shown in the 1919 1 report. The income of the three years is equal to the total" income of the association during the first 23 years of its history, and the amount added to the funds is equal to the accumulations of the first 35 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 of 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 ofi.fice. ■. ■ ■-

"There is a referenoe 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 we have had three yeara free from "any disturbing influence, and the result is shown in the amount- of claims on our Consolidated Revenue account. From an amount that was uncomfortably close to the expectation in .1919 we have dropped to an amount that is 35 per caut. below, bo that with a much larger amount at risk the claims are £429,585 less than they were three years ago. .

"The law of mortality work* 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 prevail. We, therefore, cannot hope for a continuance of the remarkably favourable experience of the last three years. The result of our operations is riven in a 1 condensed form on page fifteen of the reßprt. The valuation balance-sheet shows that while ths assurance fund at 30th September, 1522, 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 yeai3 the assurance fund had been increased by £4,063,290, and the liability has, during the same period, increased by £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.' Tho reason for this is obvious from what I have said about our recent experience, and the directors had no hesitation' in adopting the recommendation. Th» amount to be divided amongst the policy* holders— £1,455^98—is £666,011 mori than the amount that was divided thf«# years ago. and it is sufficient to p«>vide reversionary bonus or additions to the sums assured under polioies of over £2,500,000,

"We cannot claim that this very satisfactory position is the result of the last three years' work. We are reapiug the result of the conservative policy that has been followed in the management of tha affairs of the association for many years.

"A perusal of the report and schedule* will enable members to appreciate the matters that I have touched very lightly ; any elaboration of them on this occasion would b» out of place. But there is a significant fact .disclosed by the information on pace nineteen. You will see that the total of the premiums received on policies that are now in forca is lese than the amount of the assurance fund; in other words, we have now in hand more than the total premiums that have been paid by the present pclicyholders. Since the association was established we have paid to policyholders £14,999,335.

"This is the first opportunity. of informing the members direct of the completion of an important transaction by the association. Since our last annual meeting we have arranged to reinsure the whole of the Australasian business of the Equitable Life Assurance Society of tho 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 the members of the association. \

"The bonus certificates showing ','ne reversionary bonus additions to their policies will be issued to members on Thursday next, week. -

"Hitherto the association has issued bonus certificates only at the end of each triennial period; it is intended henceforth to issue to members after the close ol each year of a. triermimn certificates showing. the intermediate bomises allotted to policies for the year." Tho report wajs adopted. (Published by arranjtwnont-1