T. & G. MUTUAL LIFE SOCIETY

Evening Post, Volume CXVI, Issue 145, 16 December 1933, Page 12

T. & G. MUTUAL LIFE SOCIETY

ANNUAL MEETING

Society's Strong Position

There was a large attendance at the fifty-seventh annual meeting of the /Vusti-alasian T. and tr. Mutual Life Society held yesterday in the company's building in Collins Street, Melbourne. The elmirmnn (JMr. J. T. Thompson), who moved the adoption of the annual report, revenue account, balance-sheet, and actuarial report, said:— "Gentlemen, — "I have much pleasure in presenting the directors' report and accounts for the year ended September 30, 1933. INCREASED NEW BUSINESS. "The new 'business written during the year comprised 22,886 policies, assuring £6,331,585, and £1283 Is 4d per annum of annuities in the ordinary department, and 126,179 policies, assuring £5,131,867, in the industrial department, making an aggregate in both departments of 149,065 policies, assuring £11,513,452. This represents an increase in the amount of assurance of £894,345 above last year's figures. In the accident department the society issued 17,51.1 personal accident • and sickness policies, assuring £4,911;800, ■and, in addition, 8114 policies in the ordinary department were endorsed with accident benefits assuring £1,411,708. Tho increase of business in the accident department is very pleasing, remembering that it was established, only three years 'ago. I shall refer to this department at a later stage. As most of you are aware, the society does not extend its operations beyond Australia and New Zealand, and you must agree that the writing of such a large volume of new business in these two countries during such a year as the past one is a wonderful result. SATISFACTORY INTEREST RATE. "Tho income for the year increased to £3,893,240. Of this amount £3,052,254 was derived from premiums, and £ 840,986 . from interest. The interest income, which does not take jnto account any interest overdue, shows a yield for the year on the mean funds of £4 13s 2d per cent. This is a satisfactory rate, in view of the reductions brought about by the Financial Emergency Acts in Australia and New Zealand, and also by the reduction- of interest rates on new investments, both of which factors are, of course, common to all other life assurance societies, the interest earnings of which will be redueed^aecorclingly. "On the other side of the revenue account we. find that tho payments to policy-holders, amounting t,p £1,515,772, are less than the corresponding payments for the previous year, accounted for by a reduction both in 'maturity claims and suirenders. The reduction in surrenders is gratifying, and seems to indicate a return to better conditions' generally. The mortality experienco continued to prove extremely favourable, the increase in death claims this year being expected with the increasing age of the assured and tho larger volume of business at risk. REDUCED TAXATION. "With regard to the 'expenditure for the year, the increase in the-amount above that of the previous year is attributable to the increased new business written, which, as you arc aware, calls, for an initial outlay, which will be recouped in the future years_ of tho existence of the new policies. There has been a reduction in the amoimt paid away in taxes and licence fees this year, due to the decrease in taxable income. I am very pleased inftcpfl to announce that the Commonwealth Government has acknowledged the-. "justice of the case for the life assurance societies, and the action of Parliament in'including in the Financial Relief Act an amendment of tho Income Tax Act as far as it relates to life assurance companies will definitely case the burden on the policy-holders and their dependants. The effect of this amendment, however, will not be seen until next year's returns are made available. , ; WISE INVESTMENT MANAGEMENT. "Tho assets of the society now amount to £19,278,719, compared with £17,921,147 a year. ago. :■ lii investing the funds of a life office, one of the main questions is : the manner of the allocation of available funds into different classes' of investments in such a way that a varied distribution will onsure safety as well as a satisfactory interest yield. Taking a comprehensive view today of the distribution *o£ investments as a whole, I cannot see how it could have been improved. lam unable to .say that the board today would have preferred to see more invested in any one particular class of security and less in another. Eealising the importance of conservatism in safeguard' ing the funds, the society has.always invested heavily in Government, municipal, and other locai body loans, and I am pleased to say that it has now nearly 64 per cent, of its assets in securities of that class. Loans to policy-holders have increased to - £1,680,980. Although such loans are secured by the surrender value of the policies themselves, the society does not encourage policy-holders to' borrow, as each loan is an encroachment on the protection which the policy was intended to afford. The amount on first mortgage" is only 14.8 per 'cent, of the assets, a much smaller percentage than will be found in" the balance-sheets of many kindred institutions. Mortgages require to be selected with the utmost caution, and I am pleased to say that the board has never been lured into risky securities merely for the sake of a higher interest rate. Freehold properties stand on the books at £1,901,707, a modest figure .considering the large number of very valuable properties which the society holds in the chief cities of Australia and New Zealand. The i^maining assets include premiums due and interest due and accrued, but no interest overdue has been taken into account. Plant and furniture have also been omitted. Generally the assets are very sound, but as there is never any certainty about tho future it seems wise to create reserves when funds • permit, and the board has therefore decided to consolidate the society's position further by writing. £50,000 off the book value of premises and adding £50,000; to the general reserve fund for contingencies. . ADDITIONAL BENEFITS. • "The various services to policy-hold-ers, which extend far beyond the letter of their contracts, are still being continued. In the industrial department the society's plan of assisting policyholders who have been compelled to allow their policies to lapse through unemployment and other causes to revive their policies by means of the lien revival system has again been largely availed of, as many as 50,973 policies having been so revived during the year. The benefit granted last year to aged whole life policy-holders in the industrial department of the privilege of drawing'the proceeds at age-..80 has proved most acceptable, although in some instances the policy-holders preferred to allow the contracts to stand so as to fulfil their original purpose, namely, the payment after death of an amount to their' dependants. ■ "The nursing service has been very busy during, the year.. Although of a comparatively mild type, there was a great prevalence of influenza, which in particular entailed a heavy strain on the society's nurses. I am pleased to

say, however, that all demands were met, and the society's sick policy-hold-ers showed great appreciation of the value of tills service.

"The free periodic medical examination service was also in full operation throughout the year, and I am hopeful that, as our policy-holders learn the value of a regular overhaul and examination, they will avail themselves more largely of this service. Many of the examinations have disclosed defects of which the policy-holders themselves were unaware. The knowledge so gained must tend to alleviate suffering and prolong life. STRONG ACTUARIAL POSITION. "Coming now to the, actuarial report, you will note that the same stringent basis of valuation as used last year was adopted, namely, a 3 per cent, net premium valuation in the ordinary and industrial departments. Wo have foreseen lower interest rates on our investments, and have made the proper provision. No stronger valuation basis is used by any other life office in Australia or New Zealand. I am pleased. to state that because of that • foresight we have been able to declare in both departments the-same scales of reversionary bonuses as were allotted last year. Ont of this year's surplus of £091,009, in addition to providing for bonuses, a sum of £50,000 was held for actuarial contingencies, and £39,048 was carried forward. UNIQUE ACCIDENT RECORD. "I will now turn to the results in the accident department. This department has had a unique record since its reestablishment parly in 1930, and has grown so rapidly that the premium income last year amounted to £39,082. Such progress, so fur as I am aware, lias never been shown by any other society conducting a personal aeeident and sickness department. It appears to indicate plainly that our policy-holders were in need of some provision against accident and sickness, and therefore eagerly availed themselves of the facilities offered by the society. The claims experience lias been particularly satisfactory, and after making ample provision for unexpired risks, unannounced claims, and guaranteed bonuses, the actuary has recommended that "to all participating assurances without guaranteed bonuses there should be added a bonus of £5 per £100 on all sums-payable on account of accidental death or permanent total disability. New tables have been introduced during the year, and I am looking forward to a continuation of the rapid progress being made in this important department. ASSURANCE AS AN INVESTMENT. "The results for last year, as disclosed in the accounts, are very gratifying to the board, particularly the large increase in the new business completed during the year. Undoubtedly life assurance is becoming more popular, but lam not altogether satisfied. lam not convinced that the business man, even today, fully appreciates the value of a life assurance policy in such an institution as this. Many instances have 'come under my notice recently, -y and probably under yours also, where business men have been speculating in very doubtful securities, and in some cases they have not only failed to see dividends, but have lost some of their capital also. H 14111,111 nature being what it is, we will always -find people inclined to speculation. Sometimes the result is satisfactory, but more often the reverse happens: I do not think therefore that any man is justified in relying entirely upon such means to make provision for his wife and children after his death. In any case, even if Ihe investment chanced to show a profit ultimately, that profit is usually gained at the expense of the individual concerned, as a certain amount of anxiety and uneasiness is inseparable from the price movements and other financial developments affecting that tflass of investment. How 7nuch better it would be to invest his money with a society such as the T. and G., and in doing so obtain that peace of mind which comes from the knowledge that he has made safe provision for his dependants. His premiums would then become part of the funds of | the society, and would be inyested in sound securities; not all in one class of security, but some in Government stock, some in public body debentures, some in well-selected mortgages, properties, etc. Furthermore, the whole position is very strongly protected by the reserve fund for contingencies, which now stands in the balance-sheet at £475,853. Because of its observance of strong financial principles and its strict attention to the requirements and 3ieeds of its policy-holders the society is justified in expecting an even, greater measure of support in the future than in the past, and as conditions generally appear to be improving, 1 hope to be, able to come before you this time next year with an even better report than* that which has been placed before you today. "In conclusion, 1 should like to express, on behalf of the directors and myself, our sense of appreciation of the loyal services of the indoor and outdoor staffs.. Without their valuable work I would have been unable to present you with such an excellent record."

The retiring directors, Messrs. R. McDonald and W. Forster Woods, and the retiring auditors, Messrs. A. MeK. Hislop and C. A. Holmes, were 7 reelected.— P.B.A.