NATIONAL MUTUAL LIFE

Wairarapa Daily Times, 13 January 1932, Page 3

NATIONAL MUTUAL LIFE

NEW BUSINESS STILL LARUE. HEAVY TAXATION ON INTEREST. A sound financial position, despite general adverse conditions, is disclosed in the report of the directors of the National Mutual Life Association of Australasia, Ltd., which was presented at the annual meeting of members on 22nd December, 1931. Presenting the report, the chairman of directors (Sir John MacFarland) said: — “The affairs of established life assurance companies can be taken as a reliable barometer of the financial and economic conditions of the communities in which they do business. Their members are a large proportion of the people, and they belong to all classes; the companies’ affairs are identical with their affairs; everything that affects their welfare affects the companies. It is to be expected therefore, that the difficult conditions which have prevailed in all parts of the world during the last year will somewhat check the progress of life assurance business.

“The new business transacted by the association during the year consists of 15,849 policies, assuring £6,113,517. The average amount assured under tile 15,849 policies is only £387, which is lower than the average for many years past. This is the principal item in the report which shows the effect of the prevailing conditions. The amount of new business, does not, of course, in itself indicate the progress of a company; every new policy is a new liability, and there can be no progress unless adequate provision is made out of the current revenue to meet this liability.

“The amount of the claims which became payable through Mie death of policyholders is less than 60 per cent, of the amount that would have been paid if the deaths had been equal to the expectation according to the tables of mortality upon which our premiums are based. Forty-one policyholders who were assured for £18,211 died during the first year of assurance; the average duration of all the claim policies was IS years and 7 months. “The amount paid for rates and taxes, which, following the approved practice, is deducted from the interest received as stated in the revenue account, amounted to £283,049, or £127,207 more than the amount deducted in 1930. The amount paid in taxes is equal to nearly 3s in the £, or 15 per cent, of the gross amount of interest received. The tax is actually a penalty imposed upon the policyholders, who have to bear the whole of the burden because they have prudently made provision for their dependants. Life policyholders are, in fact, under existing legislation, the most heavily taxed class in the community. “The amount paid to policyholders during the year is £3,317,599, or £758,490 more than the amount paid in

1930.* Of this increase £410,210: is due to the surrender of policies and bonuses. The surrender of a policy is

generally an indication of the monetary need of the holder, and a large increase in the amount paid might be expected under present conditions, but it is gratifying to find that after allowing for some exceptional cases the ordinary surrenders are less than in the previous year. Four policies for large amounts —520,000 in all —one of them was for £400,000 —which had been taken out for special purposes, but owing to business developments were no longer required, were surrendered during the year. The amount paid in respect to the surrender of these policies was £477,259, so that allowing for exceptional cases the amount paid this year for the surrender of policies and bonuses is £67,073 less than in 1930. This may be taken as an indication that members realise the importance of retaining in spite of hard times the valuable investments that their policies represent. “The amount added to the funds as the result of the year’s transactions is £1,037,046. “The valuation which is to be made as at 30th September last has advanced far enough to enable me to inform you that the amount added to the funds, making them £34,558,433 16s 6d, is more than sufficient to provide for the increase in the association's liabilities during the year. The surplus, which consists of premiums paid by members in excess of the amounts that have been found to lie necessary to provide the benefits under their policies, shown in the valuation report, will be larger than the surplus shown at any previous valuation. A meeting will be called earlv in the New Year to receive the

report of the valuation. ‘ 1 The principal change during the year in the assets shown in the balancesheet is an increase of £708,090 in Government securities. The increase in the amount of interest outstanding is due to the difficult position in which many of our borrowers were placed through the failure of their crops or the low prices they were getting for their produce. In every case where after inquiry it was considered safe to do so the time for payment of interest has been extended. There are now

good prospects that the amounts overdue will soon be paid. “There are already, I think, signs of better times ahead. I hope by the time of our next annual meeting that the world will have found what one of our most eminent advisers has described as ‘the path of financial peace.’ ’’ *Sir John MacFarland expressed the thanks of the directors and members to the officers and staff of the association, and especially the staffs of the new business departments, who had done excellent work in the last year under very unfavourable conditions. Ho then moved that the report be adopted. The motion, seconded by Mr. Herbert Brookes, was agreed to. The retiring directors, Sir Robert Gibson, Sir David Orme Masson. Sir

Brudenall White, and Mr. Herbert Brookes, were re-elected, and the auditors, Messrs. W. M. Jarvic ar.il H. G.

Tudehope, were reappointed