GOVERNMENT LIFE ASSURANCE. TO THE EDITOR.

Otago Daily Times, Issue 3369, 22 November 1872, Page 3

GOVERNMENT LIFE ASSURANCE. TO THE EDITOR.

Sir -So many attacks have of late been made by the Government and its emissaries upon the Australian Mutual Provident Society, that were an agent to attempt to reply to the various statements as they appear, his time would lie pretty fully occupied with correspondence alone, and I have hitherto, principally on that account, refrained from noticing them. In your issue of to-day, however, thero appears a letter from Capt. Baldwin, containing statements which re•quire correction. Mr Baldwin states that tlie expenses of this Society during the first two years of its existence amounted to 40 per cent, of its anuual income, hut the figures he uses represent the business of the Society from its institution early in ISI9 to 23th February, 1850, or a period of about 13 months. During that time our expenses amounted to the rate per cent, mentioned by him, and which he admits is not excessive. But our rate of expenditure during the second year was under 22 per cent, or soinc•what less than tho amount charged for "loading." It rosiJ a little in the following year, but waa still within the loading rate ; aud it haa gradually decreased until for some years past the average has been about eleven per cent. The comparison, therefore, between the Government rate of expenditure and that of the Mutual Provident is anything but favourable to the former, especially when it is borne iv mind that the Government rate of loading is only a trillc over ten per cent *~ Capt Baldwin admits that the Government ratio of expenditure has been 36 per •cent during the past two years ; and if it be true that ouly 10 or II per cent be charged to defray expense.", it is enough to excite the attention, if not the alarm, of persons far lesa shrewd and thoughtful than your correspondent " Master Humphrey." Capt Baldwin anticipates that the Government rate of expenditure wilL in the course of seven years, lie reduced to four and a Inalf per cent. To

an ordinary observer, such a consummation seems very improbable when we find that the Hon. Mr Gisborne is now to receive £700 per annum as Annuities Commissioner, and what other appointments arc in store is only open to conjecture. Capt. Baldwin follows the example of Mr Vogel, and asserts as a rule that a company that has been 2, 5, 10, or 20 years in existence, ought to have a reserve fund of 2, 5, 10, or 20 per cent, of its liabilities. The absurdity of such anile is so apparent that it^is surprising that a man of Mr Vogel's ability should nave failed to perceive it. One has only to suppose the case of a society that has been in existence one hundred years, and whose business has been steadily improving, to make it evident that it could not possibly have in hand 100 per cent, of its liabilities. Or take the case of a society that haH existed for say 25 years, and a large proportion of whose business has been acquired within the last 8 or 10 years, it is equally impossible that its accumulated funds could amount to 25 per cent, of ite liabilities.

Captain Baldwin speaks—and very properly so—in somewhat eulogistic terms of the Scottish Provident Society, but he has evidently not tested its position by fcbe rale above referred fco. Had he done so he would have found that having been 35 years.in existence, and its current liabilities amounting to £7,188,5(55, ifc ought Ut have in hand £2,515,1)75 ; whereas, its accumulated fund on Ist March, 1872, amounted to £1,707,003, or about two-thirds of the stun required by Mr Baldwin's rule. Or, to put it in another shape, the Scottish Provident -which has been in existence 35 years—has in baud about 2-1 per cent, of its liabilities ; whet cas, the Australian Mutual Provident—which was established 23 years ago—bas in hand 18 per cent, of its liabilities. I. havo before me a table of returns of several Assurance Offices, but, tested by fche above rule, no one of them can be compared to either the Scottish Provident, or the Australian Mutual Provident Society.- I am, &c, EnjueNO Smith, Agent, Australian Mutual Provident Society. Dunedin, Nov. 20th.