THE MUTUAL LIFE AND CITIZENS' ASSURANCE COMPANY LIMITED

Evening Post, Volume CXXXI, Issue 103, 3 May 1941, Page 13

THE MUTUAL LIFE AND CITIZENS' ASSURANCE COMPANY LIMITED

MAXIMUM SUPPORT TO WAR

EFFORT.

Recorded Increase in Funds,

The fifty-fourth annual meeting of the company was held in Sydney on April ■ 17. The acting chairman (Sir Henry Braddon), in moving the adoption of the report and balance-sheet, said:— It will be my privilege presently to move the adoption of the annual report, balance-sheet, and accounts for the year 1940. Copies have been circulated among you prior to the meeting. I propose, with your permission, to take them as read. During the year the board recorded its deep sense of the loss sustained by the :death on June 11 of Mr. Frank Leverrier, X.C.. who was a member of the board from December 4, 1930, and rendered eminent service, giving unsparingly of his great, knowledge and ability for the welfare of the company. His place was filled by the! appointment of Mr. James Hay Ashton. previously a trustee. Sir Henry Manning, K.C., K.8.E., Attorney-General for the State of New South Wales, was appointed. a trustee in place of Mr. Ashton. Fifty-four years ago Mr. Arthur M.. Eedy, C.8.E., began his career with the company as a cadet in the first year of its existence. He has crowned it by discharging the duties of managing director since 1927. He has now retired from that position, but we are fortunate in continuing to have the. benefit of his wise counsel as a director. I am sure that the members of the company will, join with the board in expressing appreciation of his unique service. Mr. M. C. Alder, previously general secretary, has been appointed general manager and a director. Mr. H. Vaughan has been appointed general secretary and actuary. Business conditions in 1940 were overshadowed by the war. Notwithv standing the anxious and disturbed conditions of the year, the general tendency for life assurance new business to decrease, and the enlistment of a large proportion of our trained and experienced field staff, the company has carried on its operations with success. This is all the more gratifying as it has been achieved under a policy of giving maximum support to the national war effort and after making provision for war claims. By a similar policy« during and after the last war the M.L.C. played no small part in ensuring, the success of the various war and peace Loans. In 1940, in addition to subscribing to war loans in New Zealand, Canada, and the United Kingdom, it subscribed to the Commonwealth Government loans • a suni exceeding £1,500,000, which is more than one-fiftieth of the total sum raised. So it is that every policyholder may rest assured that through the payment of premiums he is making a real contribution to the war effort. • War claims paid and in course of settlement amount to more than £40,000. A number have'arisen through enemy action against our mercantile shipping and through air fatalities; others through the- participation of Australian and New Zealand forces in the campaign in Northern Africa. Our new business has been maintained surprisingly well. In the ordinary branch 18,989 new policies assuring £6,643,702 were issued, and in the industrial branch 79,293 policies assuring £3,872,897. Existing policies now number more •. than 700,000/ and with bonus additions assure more than £93,000,000. Total income for the year amounted to nearly £5,000,000 including £1,400,000 interest on investments. Taking all things into consideration a very satisfactory return was earned on the funds. This, is particularly. significant in view of the very larger proportion held in Government and Public Securities. The interest rate earned in the ordinary' branch was £4 16s 2d per cent., and in the industrial £4 17s lid per cent. Interest outstanding at the end of the year on assets of £31,897,715 was only £13,654. Of this sum, £3975 was collected in the first few weeks of the current year, and has been brought into account as an asset. Pending collection, the balance has been written off. ' . In the general branch account the item "premiums" refers to accident premiums for the half-year commencing on July 1, 1940. For some years past we reinsured our accident risks,, but it has now been thought preferable not to do so. The expenses of conducting our business were reduced. The percentage of expenses to premium income in the ordinary branch, which was 14.54 in 1939, was reduced to 13.29 in 1940. In the industrial branch the expense rate was reduced from 32.58 per cent, in 1939 to 29.66 per cent, in 1940, a saying of nearly 3 per .cent. These results' must be regarded as very gratifying. The increase in funds and general reserves amounted to £1,751,524 which is the greatest ever recorded by the company for any one year. ••?• ; The purpose of life assurance "funds is to guarantee the payment of future claims. Our life assurance funds, now £28,348,467, are large because the claims which the company will be called upon to pay in the future will be large. Just as a savings bank is expected to hold £ 1 of assets for each £ 1 due to its depositors, so does a life office need to hold the present equivalent of each £1 of assurance placed with it. This present equivalent, or actuarial reserve, is calculated on the rate of interest which it may be assumed to earn over the future duration of the policy. The lower the valuation rate, i.e., the lower rate of interest assumed,, provided that the mortality tables are satisfactory, the greater is the certainty that the actuarial reserve is adequate, and hence the greater security for the policy-holder. Security has always been the watchword of the M.L.C. Nearly forty years ago the company valued its ordinary branch liabilities on the assumption of future interest earnings at 3 per cent. This was the strongest basis in Australia at that time. In 1936 this basis was strengthened by the adoption of 9 2J per cent, net premium basis. For the year 1940 there has been a still further strengthening by the use of 2_ per cent, as the valuation rate. This Is the rate at which the industrial branch liabilities have been valued since 1934. I may add that in making : the valuation in each branch the most j modern mortality tables have been J used. | In these troublous times security is the most important quality a company can offer. In addition to the unexcelled actuarial reserves we have built up general reserves to £700,000. Further protection for policy-holders- is provided by the paid-up capital of £ 1,000,000, and by the conservative figures at which securities appear in our books. During the year payments to policyholders amounted to £2,033,367, which is approximately £7350 per workingday. Total payments to policy-holders since the inception of the company amounted to £40,888,915. These figures give some measure of our service to policy-holders, a service which, in the vast majority of cases, brings the benefit of life-assurance to their dependents, at times of special or even dire need, and which, in these and other cases, by helping the beneficiaries, helps to maintain and promote the general

well-being. But beyond the service to policy-holders there is a constant, service to the community by investment in Government and other securities for the purpose of building up the funds which guarantee the payment of these benefits, and by the investment providing moneys for employment, and Contributing to the general welfare. During the war this service is virtually concentrated ■on aiding defence and other activities of the nation. The strength of the company's posi- ! tion is evidence of the wisdom of' its founders in framing its profit-sharing constitution, adopted for ordinary policies in the early days of the company, and extended in 1925 to all industrial policies since written in Australia and New Zealand. Policies participating under this system receive a very large proportion of profits. A small percentage is allocated to shareholders who give actual guarantees which ensure energetic and efficient control. As a result, bonuses to participating policy-holders have been excellent, while the reserves have been built to a standard which places our company among the strongest financial institutions of the world. Mr. A. M. Eedy in seconding the chairman's motion said:—lt is a source of satisfaction to us all that during a war year, in spite of its difficult conr ditions, the strength of the company has been further increased, and that bonuses to policy-holders have been maintained. % As an example of the benefits accruing to members of the community generally in the investment of our funds,. I may quote the £3,000,000 advanced to Co-operative Building Societies (already reduced by repayments to £2,500,000 approximately) enabling the erection of some 4500 homes. Not only has employment been provided for many, but the housing difficulty has been ameliorated. A very pleasing feature is the improved outlook and the happier conditions of life for those who have benefited by our investment activities in this direction. A. typical case came recently under notice, where people who had lived for many years in a home only eight feet wide, in a terrace in a congested area, were able to move into a new home in a bright new suburb. They will pay small weekly instalments for 21 years, after which the property will be their- own. This cottage was shown to our general manager with obvious and justifiable pride. The company is anxious that those who work for it, both in the office and in the field, should have the best practicable conditions. To this end superannuation schemes have been arranged for the various sections of the company's service. The commencement of a superannuation scheme as from and including the year 1940. for the industrial agents of the company, means that every section of the company's service now has such a scheme.—P.B.A.