ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1899.

Appendix to the Journals of the House of Representatives, 1900 Session I, H-08

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1900. NEW ZEALAND.

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1899.

Presented to both Houses of the General Assembly pursuant to the provisions of the Acts relating to Government Life Insurance.

Government Insurance Office, Wellington, 4th July, 1900. I have the honour to submit my report upon the transactions of the Department for the past year. The accounts and usual detailed statement of progress are appended. New Business. During the year 4,704 proposals were dealt with, for the assurance of £987,534; of which 3,565 proposals for life insurance, assuring the sum of £"740,828, were completed, and policies issued accordingly. The annual premiums on these new policies amounted to £"24,093, in addition to single premiums for £1,702. Sixty-four children's endowments were granted for £7,600, and also 20 immediate annuities, for which the purchase-money was £"10,746. The total number of new policies was 263 in excess of the previous year, and the new sum assured £"34,939. The new business was, in fact, larger than at any time during the past ten years. There are now in existence on the books of the Department 39,366 policies, for the assurance at death or maturity of (including bonus additions), and annuities—■ immediate or deferred —for £23,810 per annum ; the total premiums on these policies amounting to £"284,51-7 per annum. Income. The income of the Department for the year has been £"288,101. for premiums, and £"133,466 for interest; making, with other receipts, a total of £"421,569, which represents an increase of £"11,421 upon the total income of the previous year. Claims and Expenses. Two hundred and eighty-two policyholders died during the year, the claims upon their policies amounting to £"95,322, which was £"13,768 less than was paid on this account in 1898, and considerably less than the amount expected according to the standard table of mortality upon which the operations of the Department are based. The average age of the lives assured under policies becoming claims by death was fifty-one and a quarter, and the average duration of the policies fifteen years. Two hundred and twenty policies matured during the year, the total claims in this respect amounting to £"66,747. This item of outgo is naturally constantly increasing, and, being practically known in advance, it is possible to make the necessary provision for it without any strain whatever on the resources of the Department. Endowment Assurances have become the most popular of all the varieties of life insurance, and a large and increasing amount payable yearly to these policies at maturity is a satisfactory testimony to the permanent nature of a class of business which is growing in favour with the public. The total amount paid by the Department, since its foundation thirty years ago, in respect of death claims and matured endowments has been £1,849,125. The disbursements on account of commission and management expenses show a reduced percentage on the income of the Department, the ratio of expenses (including the land- and income-tax) to total income now standing at 14-15 per cent., as against 1434 per cent, in 1:898, and 14-86 in 1897. Accumulated Funds. The total increase in the funds during the year'amounted to £"150,547, of which £"14,400 was carried to reserve, and the balance of £"136,147 added to the Insurance Fund, which now stands at £"2,997,681. The Department having now been in existence thirty years, it will be of interest to trace its progress in the accumulation of funds, and in other respects, for each period of ten years, as shown in the following statement:—

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The Balance-sheet. On the 31st December, 1899, the total assets of the Department amounted to £3,071,581, and were invested as shown in the following comparative statement: —

It will be seen that there has been a further decrease of £"39,971 in Government securities, and of £"14,200 in cash in hand. There have also been decreases of £"11,918 in local bodies debentures, and £13,545 i n properties acquired by foreclosure. The increase in loans on policies —£18,088 —is much smaller than usual, and the asset which shows the greatest advance is that of mortgages on freehold property, which has been increased by £"202,769. Triennial Investigation. The triennial valuation of the liabilities has been completed, and the report of the Department's Actuary is appended. Before the basis of valuation was finally adopted, the advice of the Department's well-known Consulting Actuaries in London was sought, and these gentlemen (Messrs. Ralph P. Hardy and George King) acquiesced in the view here held that the valuation should be made upon the basis of 3J per cent, interest. The valuation was accordingly made upon that basis, the resulting surplus of £"126,600 being converted into reversionary bonuses, and the certificates have been forwarded to the policyholders. Although, by valuing at per cent., and also making strong reserves in connection with the investments, the bonuses suffer a slight temporary reduction, it is felt that undoubted security is the first thing to be considered ; and, under existing circumstances, the course now adopted must inevitably tend to develop the best interests of the policyholders. General Remarks. During the last session of Parliament a short Amending Act was passed, making better arrangements for dealing with property of the Department, and enabling the Commissioner to delegate certain duties to subordinate officers for the more efficient conduct of business. An Act was also passed enabling the Department to transact Accident Insurance, and the preliminary arrangements necessary to give effect to the Act are receiving attention. A further reduction in the rate of interest charged on loans to policyholders upon the security of their policies was made, the change coming into effect immediately after the 31st December, 1899. The war in South Africa compelled the Department to face, for the first time, the question of war risks, as many ol its policyholders were likely to engage in the war, and applications for insurance were received from those actually proceeding to the front. In such cases temporary assurances for two years were granted, at a uniform rate of £"6 10s. per cent, per annum, the policies being limited to £"250, but no restrictions whatever were imposed upon those already insured ; and I am happy to say that, up to the date of this report, the Department has had only two. claims directly traceable to the effects of the war. After consultation with the London Actuaries, and a thorough consideration of the matter in all its bearings, it was decided to place the premium - rates upon a 3-J-per-cent. basis. Complete new tables of premiums consequently formed, and applied to all new business after the 31st December, 1899. Now that the valuation of existing business and the premiums for new business are both placed upon a basis, the Department's financial position is greatly strengthened, and I confidently anticipate the best results for the policyholders. J. H. Richardson, Government Insurance Commissioner.

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Policies i: Force. Revenue Accumulated Funds. Year. Year. Premium Income. — from Interest. No. Sum assured. Bonuses. 1879 1889 1899 IO,223 27,218 39,3 66 £ 3,726,300 7,326,100 9,558,200 £ 274,4°° 783,5oo £ 118,200 218,800 284,500 £ 16,700 81,400 133,50° £ 371,900 1,582,400 2,997,700 1879 . 1889 1899

At 31st Di :cember, 1898. At 31st December, 1899. Amount. Percentage of Total Assets. Class of Investment. Amount. Percentage of Total Assets. £ 1,130,609 827,858 54 I >474 150,829 120,938 85,151 47,735 19,770 387 per cent. 28-3 18-5 „ 5-2 4-1 2-9 i-6 „ Mortgages on freehold property Government securities Loans on policies Local bodies' debentures ... Landed and house property Miscellaneous assets Cash on current account ... Properties acquired by foreclosure ... £ i,333,378 787,887 559,562 138,911 122,650 89,433 33,535 6,225 43'4 P er cent. 257 18-2 4 - 5 4'° 2-9 i-i 07 0-2 „ '2,924,364 ioo-o Total £3,071,581 I00 - 0 it

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Revenue Account of the Government Life Insurance Department for the Year ended 31st December, 1899. £ a. d. £ a. d. Amount of funds at Ist January, 1899 2,861,534 910 Death claims under policies, Assurance, Renewal premiums — Assuranoe, An- including bonus additions.. .. 95,322 5 0 nuity, and Endowment .. .. 253,429 19 4 Endowment Assurances matured, inNew premiums (including instalments oluding bonus additions .. .. 65,074 10 0 of first year's premiums falling due Endowments matured .. .. 1,672 7 11 in the year) .. .. .. 22,222 10 9 Premiums returned on endowments .. 11 9 10 Single premiums—Assurance and En- Bonuses surrendered for cash .. 1,354 17 10 dowment .. .. .. 1,702 4 5 Annuities .. .. .. .. 10,823 8 11 Consideration for Annuities .. .. 10,746 0 1 Surrenders.. .. .. .. 18,937 3 7 Interest .. .. .. .. 133,465 12 7 ' Loans released by surrender.. .. 18,187 311 Pees .. .. .. .. 2 13 11 i Commission, new ..£12,605 17 2 „ renewal .. 1,945 5 0 14,551 2 2 Land-and income-tax .. .. 9,284 13 0 Expenses of management— S £L 1 d r i s Head Offioe .. £11,533 7 5 Branch offices and agents .. .. 6,417 15 11 Extra clerical assistance 1,480 0 0 Medical fees and expenses .. .. 5,008 0 7 Travelling-expenses .. 1,014 9 8 Advertising .. .. 877 0 10 Printing and stationery 1,104 11 8 Rent .. .. 2,290 6 8 Postage .. .. 1,546 18 1 Telegrams .. .. 451 17 11 Exchange .. .. 90 2 1 Office furniture depreciation .. .. 362 11 10 General expenses .. 2,068 18 8 Triennial expenses .. 1,557 7 1 35,803 8 5 Investment Fluctuation Reserve .. 14,400 0 0 Amount of funds, 31st December, 1899 2,997,681 0 4 £3,283,103 10 11 £3,283,103 10 11

Balance-sheet of the Government Life ' Insurance Department on 31st December, 1899. Liabilities. Assets. £ s. d. £ s. d. £ s. d. Total Assurance, Annuity, and En- Loans on policies .. .. .. 559,561 12 7 dowment Funds (as per Revenue Government securities — Account) .. .. .. 2,997,681 0 4 Consolidated stock .. 625,900 0 0 Claims admitted, proofs not yet com- Treasury bills .. 120,000 0 0 pleted .. .. .. .. 15,353 8 0 Railway debentures Annuities .. .. .. .. 15 1 1 (guaranteed by GoCommission .. .. .. 522 4 1 vernment) .. 40,000 0 0 Medical fees .. .. .. 528 3 0 Debentures issued Premium and other deposits.. .. 3,146 17 7 under "The Immi-Fire-insurance moneys in suspense .. 50 0 0 gration and Public Tontine Savings Funds .. .. 17,987 6 8 Works Act, 1870" 1,987 5 11 Investment Fluctuation Reserve* .. 36,296 19 7 787,887 511 Municipal Corporation debentures .. 98,410 15 1 County securities .. .. .. 1,000 0 0 Harbour Board debentures .. .. 39,000 0 0 Town Board debentures .. .. 500 0 0 Landed and house property .. .. 122,650 0 2 Office furniture (Head Office and agencies) .. .. .. 2,946 18 8 Mortgages on property .. .. 1,333,377 13 4 Properties acquired by foreclosure .. 6,225 10 0 Overdue premiums on policies in force .. 6,157 19 0 Outstanding premiums due but not overdue.. 32,914 17 10 — 39,072 16 10 Overdue interest .. 605 2 5 Outstanding interest due but not overdue.. 4,370 14 7 Interest acorued but not due .. .. 37,786 2 5 42,761 19 5 Agents'balances .. .. .. 3,572 7 i Sundry aocounts owing .. .. 1,078 16 6 Cash in hand and on current account.. 33,535 4 6 £3,071,581 0 4 £3,071,581 0 4 Government Life Insurance Department, 11th May, 1900. J. H. Richardson, Commissioner. W. B. Hudson, Audited and found correct. Secretary. J. K. Warburton, Controller and Auditor-General.

* Including Reserve for possible depreciation in freehold and mortgage securities.

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Statement of Business

Wellington, 19th February, 1900.

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ASI URANCES. YEAR: 1899. No. TOTAL. Annual Premium. Whole-life a; d Term Assurances. Beversionary — Bonus. Annual Premium. 1. Ordinary. 2. Extra. Sum Assured. Reversionary Bonus. Annuities. No. Sum Assured. 7. Ordinary. 2. Extra. 1. Immediate. 2. Deferred. polici: ,S I SUED AND DISCONPolicies in force at 31st December, 1898 37,848 £ 9,304,742 £ 819,485 £ s - d - (271,723 3 1 1 3,977 15 2 £ ■• d. 10,987 4 5) 9,9i8 11 3j 18,352 £ 5,347,623 £ 584,369 £ s. d. (132,477 0 7( I 3,225 4 7J New business, 1899 3,649 748,428 11 ( 24,230 4 4 1 133 14 8 984 16 4] 3,161 4 2 J 856 214,582 11 f 5,664 4 2) t 72 5 4) Total 141,497 10,053,170 819,496: I 295,953 7 5 ( 4,111 9 10 11,972 o .91 13,079 15 5) ;19,208 5,562,205 584,380 If 138,141 4 9| \ 3,297 9 llj" Policies discontinued during 1899 2.I3 1 495,004 35,960! ( 15,527 18 7 I 278 3 11 687 17 51 553 14 2] 939 240,440 20,257 f 6.222 10 9) \ 211 12 7j Total Policies in force at 31st Decern-1 ber, 1699 J ( 280,425 8 10 1 3,833 5 11 11.284 3 41 12,526 1 8-J 5,321,765 564,123 (181,918 14 0) t 3,085 17 4j 39,366! 9,558.166! 783,536 18,269 RTICULA S o pol: CIES DISCONHow Discontinued. By Death Maturity 326 220 82,389 55,269 10,871 9,926 I J 1 f 1 2,341 7 11 70 17 10 2,629 8 o 17 13 5 2,510 18 8 38 1 6 1 687 17 5j 232 64,674 9,245 f 1,683 12 9) 1 64 4 10/ f 899 5 11) I 34 0 10} Surrender 340 78,245 4,873 412 5 6J 138 33,761 3,026 Surrender of Bonus 2,360 1,685 Lapse 1,244 279,001 7,930 ( 7,796 9 8 103 14 2 141 8 8j 568 141,905 6,301 f 3,409 15 0) t 75 4 4} Expiry of Policy 1 100 o 18 9 1 100 0 18 9 Expiry of Premium ( { 220 3 3 13 4 7 28 12 4 34 12 5 } I / 220 3 3) \ 13 4 7/ j 8 15 1) I 24 18 0/ Miscellaneous .. Total f 1 15,527 18 7 278 3 11 68T 17 51 553 14 2J { 1 6,222 10 9) 211 12 7j 2,131 495,0041 35,960 939 240,440 20,257 PROGRESS OP BUSINESS OP THE GOVERNMENT LIFE INSURANCE 'otal issued 'otal void.. Total in force .. 78,15919,698,696 •• 38,79310,140,530 • • 39,366 9,558,166 3J »».««4{ 31 K 5 1} 31,241 1 4 7,430 16 9 39,561 21,292 11,684,683,973,270 6,362,918|409,147 (308,002 0 8) t 10,627 7 8/ /176.083 6 8) \ 7,541 10 4/ 9,558,166 783,5361 280,425 8 101 11,284 8 41 12,526 1 3) 18,269 5,321,765 564,123 (131,918 14 0) \ 3,085 17 4/ Extra Premiums Reduction of Premium by Bonus, &o. ,. 3,833 5 11 258 15 o Note.—The Ordinary Premium is the premium charged £284,517 9 9

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at end of Year 1899.

J. H. RICHARDSON, Commissioner. MORRIS FOX, Actuary.

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ASSURANCES. SIMPLE N DOW ME NTS, ESTMENTS.&C. ANNUITIES. E INV Endow; ,ent Assurances. Annuity Assurances. No Sum Assured. Reversionary — Bonus. Annua] Premium. 1. Ordinary. 3. Extra. Annua] Premium. 1. Sum No 2 A Beve?: Deferred Annual sionlry Annuities. Premium. Bonus. No. Annual Annuities. Premium. L Imme diate. 2. Deferred. No. Sum Assured. Annual Premium. TINUED DURING THE YEAR 1899. 18,638 £ 3,893,183 £ 234,818; £ s. d. (136,340 10 8) 1 752 10 7/ £ qq (25,800) "( 298/ £ s. d. 9,397 14 3 £ s. d. 1,368 4 4 f 256 1 io £ s. d. £ s. d. ) 1/10,987 4 5) } 79 0 8 \ 520 17 o} £ 38,136 £ s. d. 1,458 6 10 393 2,649' 518,096 / 17,868 11 9) j 61 9 4/ 60 8,150 3,161 4 2 426 10 0 984 16 4 64 7,600 270 18 5 20 21,287 4,411,279 234,818 /154.209 2 5) I 813 19 11} 9 , q (33,950) 3J ( 298} 10 I 1 ' 500 \ 10 ( 20/ 12,558 18 5 1,794 14 4 f 276 1 io ) j (11,972 0 9) Ji 79 0 8 ( 520 17 0/ 457 45,736 1,729 5 3 1,129 250,088 15,683 / 9,079 3 1) ( 66 11 4} 553 14 2 79 5 8 19 ( 687 17 5 I 34 2,976 146 19 1 —. 1 „J (32,450) j I 278/ ! 20,158 4,161,191 219,135 /145.129 19 4) ( 747 8 7/ 12,005 4 3 1,715 8 8 (257 1 10 | '/11.284 3 4) } ' 9 ° 8 ; { 520 17 0J 423 42,760 1,582 6 2 TINUED DURING THE Y! IAR 1899. 75 17,715 1,626 { ] I ( 1 657 15 2) 6 13 o} 2,530 0 9) 17 13 5 J 1,523 1 51 4 0 8} 19 / 687 17 5) ( •• J 196 53,596 9,926 24 1,673 99 7 3 188 42,581 1,835 8 I 1,100) 1 12/ 412 5 6 56 12 8 6 803 31 18 8 675 670 136,196 1,621 f 1 4,348 8 6) 28 9 10/ 2 ( 400) 1 8j 141 8 8 22 13 0 4 500 15 13 2 I 119 17 3) 9 14 5/ f 9,079 3 1) 66 11 4 J 10 ( 1,500) 1 20) 553 14 2 79 5 8 19 f 687 17 5) 34 2,976 146 19 1 1,129 250,0881 15,683: DEPARTMENT SINCE DA 1 'E OP ESTABLISHMENT TO 31st DECEMBER, 18 '9. 35,872 15,714 7,857,099 3,695,908 a no nn- (281,229 3 8) 402,000 | 2 ' 815 8U j 189 870 {136,099 4 4) 182,870 | 2)067 15 4 | 273 1 3G 'g2g} 13,235 9 41,912 12 0 24 | 8 '™l 1,230 5 1 197 3 4 399 132 203 11 11 124 11 3 18,005 12 0 6,200 11 8 ! i 2,054 120,764,5,549 8 0 1,631 78,004J3,967 1 10 20,158 4,161,1911219,135 /145.129 19 4) 1 747 8 7} 249 { 32, 2to1 12 ' 005 4 3 1,715 8 8 /257 1 io 79"o 8 11,284 3 4} 520 17 0} 423 42,760 1,582 6 2 at the true age; the Extra, the additional premium imposed for any reason whatsoever.

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REPORT BY THE ACTUARY ON THE TBIENNIAL VALUATION, 31st December, 1899. Made under Section 45 of "The Government Insurance and Annuities Act, 1874," and Section 8 of "The Government Life Insurance Acts Amendment Act, 1890."

Wellington, 7th June, 1900. In accordance with instructions I have made a valuation of the Department's liabilities under its life assurance and annuity contracts as at the 31st December last, and I now beg to report the results. PROGRESS OF BUSINESS. The new business of the triennium showed a considerable improvement, and the following statement sets forth the business actually completed (exclusive of annuities) as compared with that of the preceding three years : —

New Business (exclusive of Annuities).

The increase in the total business in force is seen from the following figures:—

Total Business in Force (exclusive of Annuities).

The substantial increase to the business in force arose almost entirely from endowment assurances, whole-life assurances remaining nearly stationary. Including annuities, there were 39,366 policies for valuation, assuring the sum of £9,558,166, with reversionary bonus additions of £783,536 —making the total amount payable at death or maturity £10,341,702 —and £23,810 annuities per annum, immediate and deferred ; in respect of which ordinary premiums amounting to £280,684 are receivable annually. The Department also receives €3,833 per annum, representing additions to the tabular premiums, imposed when assurances are accepted on lives which are estimated to fall below the requisite standard for any reason; these extra premiums are held to cover the current extra risk, and are not brought into the valuation.

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Triennium. Number of Policies. Sums assured Annual Premiums. 10,126 £ 2,127,815 £ s. d. 69,263 1 9 1897-99 1894-96 8,927 1,943,047 61,602 13 9 Increase 1,199 £184,768 £7,660 8 0

Date. "a"* 0 ' Sum assured. £ 39,099 9,558,166 34,531 8,754,804 Beversionary Bonuses. £ 783,536 Annual Premiums. £ s. d. 284,438 9 1 31st December, 1899 31st December, 1896 660,889 258,757 10 9 Increase 4,568 £803,362 £122,647 £25,680 18 4

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CONSOLIDATED REVENUE ACCOUNT. The Consolidated Revenue Account of the Department for the past three years compares with that for the preceding triennium as follows:—

In commenting on the foregoing comparative statement of revenue and expenditure, it may be noted in the first place that the funds have been increased by £406,339 during the period under review. The income from premiums showed a satisfactory increase ; but the consideration received for the purchase of annuities was considerably less, doubtless owing to the rates having been more stringent for new annuities since 1896. There was, of course, an increase in the revenue from interest, but the average rate of interest realised has fallen from £5 Bs. 2d. per cent, in 1891 to £4 lis. Id. per cent, last year, as will be seen from the following : — £ s. d. £ s. d. £ s. d. 1891 .. ..582 1894 .. .. ..550; 1897 .. .. 416 7 1892 .. ..552 1895 .. .. ..523 1898 .. .. 413 11 1893 .. ..553 1896 .. .. .. 419 0 1899 .. .. 411 1 It will be evident what an adverse influence on the bonus-earning power of any life insurance office must be the result of such a continuous fall in the rate of interest earned, but it should be borne in mind that the Department's experience in this respect has been shared generally by other offices. Eeferring to the outgo of the triennium, it may be pointed out that the amount paid in death claims increased very slightly, especially when the development of the business is taken into consideration ; there was, indeed, a large profit from favourable mortality. The actual decrease in the amounts paid for surrenders and cash bonuses is also a favourable feature, as is the very large increase in the payments for matured claims, both items indicating a satisfactory improvement in the permanent nature of the Department's business. The increases in commission and expenses are not large, and, although the amount paid in taxes is considerably greater than for the preceding period, the ratio of the total expenses (including taxes) declined from 21-9 per cent, in 1897 to 21-1 per cent, in 1898, and still further in 1899 to 20-7 per cent., of the premium income. THE VALUATION. The liabilities under life policies have been valued, as before, by the Institute of Actuaries' Healthy Males Table of Mortality, but the rate of interest assumed was 3| per cent., instead of 4 per cent., the rate adopted for the last three valuations. The valuation has been made on a strictly net-premium basis, extra reserves have been made for limited-premium policies and for the immediate payment of claims, and allowance has been made for the actual incidence of the premium income. The annuities have been valued by the 1884 Government Annuitants' Experience, with 3£ per cent, interest, a special reserve being made for annuities granted since the 20th May, 1896, at increased rates, bringing up their reserves to a 3 per cent, standard. A special analysis of the annuities showed a profit for the triennium on that class of £3,581, which is merged in the general surplus. A valuation upon the foregoing basis resulted in a net liability of £2,871,081, as will be seen from the appended Valuation Summary; and, the assurance and annuity funds at the close of the triennium amounting to £2,997,681, there resulted a surplus of £126,600, as shown by the following valuation balance-sheet: —

Valuation Balance-sheet, 31st December, 1899.

Previous Triennium. II Previous Triennium. Funds at beginning of triennium Premiums Annuities Interest Fees £ 2,591,342 808,821 27,916 393,078 24 £ 2,128,590 743,191 47,765 359,499 20 Death claims Matured olaims Annuities Surrenders Cash bonuses Commission Taxes Expenses Investment reserves Funds at end of triennium .. £ 297,188 182,262 32,245 94,754 20,373 43,854 26,050 107,724 19,050 2,997,681 £ 276,064 76,677 25,885 115,503 21,891 39,674 20,105 101,424 10,500 2,591,342 Total £3,821,181 £3,279,065 Total £3,821,181 £3,279,065

To Net liability, as per attached Valuation Summary „ Surplus.. £ By Assurance and Annuity Funds, as 2,871,081 per Revenue Account 126,600 £2,997,681 £ 2,997,681 £2,997,681

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In addition to the above surplus, £7,478 was paid as interim bonus, and £29,935 was absorbed in completing the transition from a 4 per cent, to a 3f per cent, basis of valuation, thus making the total profit for the three years £164,013. ALLOTMENT OF SURPLUS. The results of the valuation made in the manner described being reported to the Department's Consulting Actuaries in London—Messrs. E. P. Hardy and George King—those gentlemen approved of their adoption, and acquiesced in the proposal to divide the surplus of £126,600 among the policyholders. The principles guiding the distribution were those recommended by Messrs. Bailey, Hardy, and King, and adopted by the Department on the occasion of its 1890 valuation. The approximate profit from favourable mortality in the General and Temperance Sections respectively was ascertained and divided among the members of the two sections, with the result that General and Temperance policies, which were alike in all other respects, received equal reversionary bonuses. GENERAL REMARKS. The immediate result of the adoption of a 3£ per cent, interest basis will be a slight temporary reduction in the bonuses to policyholders. This is, of course, unfortunate, but the rate of interest has everywhere fallen very considerably during recent years, and there is a remarkable unanimity of expert opinion as to the necessity for strengthening life insurance reserves. A recent issue of the Economist states that, out of eight British companies reporting on their valuations last year, five have decreased their bonuses and five have strengthened the bases of their reserves. It concludes by saying that, " these facts faithfully reflect the inevitable effect of present financial conditions on life assurance funds, and no greater benefit can accrue to the British policyholder than that the companies should have the wisdom and courage to make their position stronger, even at the c ,t of distributing less by way of profit." It is probable, indeed, that the necessity may eventually arise for still further strengthening the reserves, and, with this ultimate object in view, I think it will be well to consider the advisability of making a Valuation Eeserve Fund, by retaining a certain proportion of the surplus of each triennium. The reserve so formed will lower the virtual rate of interest in future valuations, and, while still further strengthening the position of the Department, will tend to prevent fluctuations in the periodical bonuses. Now that the valuation has been placed on a 3-J- per cent, basis, and such reserves have been made in connection with the investments that there is little likelihood of any further considerable demands upon the profits in this connection for some time to come, I consider the prospects of laiger bonuses in the future are much improved ; and, in conclusion, I beg to recommend that interim bonuses be allotted to participating policies becoming claims during the present triennium at the rate of 20s. per cent, per annum upon the sums assured and existing bonuses in the case of death claims, and 245. per cent, per annum in the case of claims by maturity. Eespectfully submitted, Moeeis Fox, The Government Insurance Commissioner. Actuary.

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SUMMARY AND VALUATION OF THE POLICIES OF THE As at 31st

PAETICULABS OF POLICIES FOB VALUATION. DESCRIPTION OP TRANSACTIONS Number of Policies. Sums assured and Bonuses. I Annuities. Office Ykablt Premiums. Ordinary. Extra (not valued). ASSURANCES. I. With Participation in Profits. £ s. d. £ ■■ d. £ s. d. £ s - d - Whole-life Assurances : Uniform Premiums Whole-life Assurances: Limited, Single, and Commuted Premiums Endowment Assurances Double-endowment Assurances Joint-life Assurances Survivorship Assurances .. .. Annuity Assurances: Temporary Assurance, with Deferred Annuity Annuity Assurances : Whole-life Assurance, with Deferred Annuity Reserve for Extra Premiums 17,348 899 5,405,466 5 o 47!,393 12 2 128,058 12 1 3,696 o o 3,022 6 9 36 1 1 18,740 1,418 11 4,017,580 6 o 362,745 12 o 5,988 9 o 597 5 o 18,610 8 o 134,229 6 4 11,009 IO 3 245 10 11 16 10 0 922 6 o 745 6 7 220 4 3 8 2 10 o 1 136 6,413 17 6 "3 14,117 5 o 5,59i 6 9 793 2 8 Additional Reserve of Loading Total Assurances with Profits .. 38,666 110,296,499 2 2 12,005 4 3 278,970 18 3 3,812 10 1 t II. Without Participation in Profits. Whole-life Assurances (transferred from Temperance to Non-profit) Industrial Assurances Temporary Assurances Reserve for Extra Premiums 7 13 3 1,591 18 o 254 2 O 850 o o 39 13 4 6 10 o 12 5 5 20 15 10 Total Assurances without Profits 23 2,696 0 0 58 8 9 20 15 10 Total Assurances 08,689 10,299,195 2 2 12,005 4 3 279,029 7 0 3,833 5 11 ENDOWMENTS. Without Participation in Profits. Endowments with Return of Premiums Investments 330 8o 39,759 o o 2,747 8 8 42,506 8 8 1,474 18 2 100 18 o Total Endowments 410 1,575 16 2 ANNUITIES. Without Participation in Profits. Immediate Reversionary Deferred .. • • • • . Additional Reserve for Annuities .. 257 1 9 11,284 3 4 300 0 o 220 17 o 79 o 8 Total Annuities 267 111,805 0 4 79 0 8 Total o* tne f Policies Results \ Annuities 39,0991 2671 10,341,701 10 10 ,23,810 4 7 280,684 3 10 3,833 5 11

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NEW ZEALAND GOVERNMENT LIFE INSURANCE DEPARTMENT, December, 1899.

Approximate cost of Paper.—-Preparation, not given; printing (6,375 copies), £18 Bs.

Price 6d.~]

Authority: John Mackay, Government Printer, Wellington.—l9oo.

VAT TT A T'TOTJ ■ i Assurances by the Institute of Actuaries H m Table ; V xxJ-i U A1 1U JN . j Immediate Annuities by English Government Annuitants' (1884) 'ables; Interest, 34 per cent. Net Yearly Premiums. Beduction of Premiums. £™ s Office Net Eeductior As a s 5 Annuities. Yearly Yearly of Bonuses Premiums. Premiums. Premiums Annuities. Office Yearly Premiums. Net Yearly Premiums. Reduction of Premiums. NET LIABILITY. £ £ s. d. £ £ £ £ £ £ 110,2420 3,162-4 146 3 2 3 14 7 2,755,337 276,879 I,737,445 24,784 1,472,870 20,812 1,693 33 1,284,160 256,100 115,6747 9,874-6 2060 137 861-0 108 17 3 2,441,434 158,778 3,598 124 3,582 1,499,622 148,528 2,661 5i 15,574 1,277,528 132,535 2,209 42 14,599 901 1,164,807 26,243 1,389 82 2,680 13,697 760-4 4,645 10,841 13,688 13,161 2,325 953 v 953 Deduct 2,933,756 9,516 Add 2,738,739 9,516 240,794-8 258 15 0 5,645,330 24,538 3,442,353 2,924,240 2,627 2,748,255 33'8 483 773 573 290 75 7 16 75 7 16 33-8 871 573 483 388 240,828-6 258 15 0 5,646,201 24,538 3,442,926 2.924,723 2,627 2,748,643 I3,!43 2,205 I3>!43 2,205 15,348 15,348 103,035 1,298 1,660 1,097 103,035 1,298 1,660 1,097 107,090 107,090 240,828'6 258 15 0 5,661,549 131,628 3,442,926 2,924.723 2,627 2,871,081