GREAT EXPANSION

Waikato Times, Volume 121, Issue 20189, 8 May 1937, Page 11

GREAT EXPANSION

A.M.P. DEVELOPMENT. HIGHER TAXATION UNJUSTIFIED. SIR WILLIAM HUNT’S REVIEW. “It has been well said that life assurance flgures are a good barometer of the times, the flgures rising and falling in sympathy with economJo conditions, and our splendid new business yield in many respects reflects the trade recovery which has taken place In the Dominion,” stated Sir William Hunt, the New Zealand delegate, at the annual meeting of the Australian Mutual Provident Society in Sydney yesterday “In an age when record-breaking of one description or another seems to be a feature of dally affairs, it is a gratifying and reassuring thought that such a beneficent object as life assurance—and in particular that as offered by the A.M.P. Society—should And a place on the scroll of events,” he added. “So far as we in New Zealand are concerned, the past year closed with our ordinary department new business register showing the unprecedented total of over £5,500,000, which is an increase of no less than £1.500,000 over the previous year’s flgures, and representing about £3 14s 8d per head of the total population of the Dominion.”

Sir William said special attention had been paid to the conservation of existing business during the year, with the most encouraging results, and although the society had the lowest percentage of preventable waste business of any office In New Zealand, no effort was being spared to reduce the amount further. From the standpoint of incidence of population New Zealand was not so fortunately placed as Australia so far as the writing of industrial assurance was concerned. In Australia a very substantial portion of the population was living in the metropolitan areas and engaged largely in ■secondary industries, which provided a fertile flel-d for the writing of industrial assurance, whereas in New Zealand probably a larger proportion of the population was occupied in primary pursuits, resulting in a more scattered field of canvass. However, it was pleasing to note that the Industrial new business had net increase flgures were both well in excess of the previous record flgures established during 1935, and were a happy augury for the further development of this ,side of the society’s activities in the Dominion. A National Institution. “The society might well be regarded as a national institution —in New Zealand, not only by reason of the faot that It holds on its books over 40 per cent, of the total life assurance in force in the Dominion, but also from the standpoint of its financial stake In the country,” continued Sir William. “The New Zealand branch assets (all of which are Invested In the Dominion) have now reached the substantial total approaching £20,000,000, of which loan on mortgage investments represent some £3,000,000, Government securities £3,500,000, and loans to public bodies and municipalities approximately £9,000,000. “During the year our loan operations were characterised by an unusually large expansion In mortgago Investments, a sum of approximately £1,000,000 being advanced, mostly on rural lands conservatively valued and providing unimpeachable security. “Regarding taxation, it is a matter for some regret that the Government thought fit during the year to increase the taxation payable by life offices in New Zealand. At first glance It may perhaps be considered that life assurance offices, by virtue, of their large and rapidly-accumulating funds, can well afford the demands made upon them for taxation. The all-important fact must not be overlooked, however, that these large funds are not ‘reserves’ as in the sense of ordinary trading concerns, built up from profits, but rather do they comprise the aggregate of many small interests of individual policyholders—the totals of Hie minimum amounts which will, with future premiums and interest, be sufficient to pay future claims when they arise. “In other words, these funds arc capital sums, or savings, which must eventually be returned to the policyholders or their dependants. There are some 600,000 life assurance policies in force in New Zealand, and a large proportion of these policies represents a provision for dependent wives and children, and as every additional expense Incurred by the office must necessarily restrict its bonus-paying powers the tax on insurance offices has not unjustly been referred to as *a tax on widows and orphans.’ The bonuses paid to policyholders certainly often receive the designation of ‘profits,’ but strictly speaking this is an incorrect use of the word, as they are. in reality, exces contributions which arc returned either in the form of cash or increased assurance. Not Capitalists. “Under the 000.000 policies, there are in New Zealand assurances totalling nearly £120,000.000. which represent an average policy of less than £2OO, and an average annual premium payment of about £7. This demonstrates very forcibly the fallacy of the assumption that life offices are a combination of capitalists. Althougr New Zealand has perhaps the lowest infant mortality in the world, the serious fact remains dial the accelerative rale of population increase is slowly declining. It seems that the progressive fall in Hie birth rate was aggravated by the depression, but the advent of more prosperous limes, notwithstanding Hie marked increase in the number of marriages, has failed to check the Tall in the birth rule,” concluded Sir William.