ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1905.

Appendix to the Journals of the House of Representatives, 1906 Session II, H-08

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Session 11. 1906. NEW ZEALAND

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1905.

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

Government Insurance Office, Wellington, ist June, 1906. I have the honour to submit the following report upon the business of the Department for the year ending the 31st December, 1905. The Revenue Account, Balance-sheet, and Statement of business are appended. New Business. —During the year 3,861 proposals were dealt with, for the assurance of £891,486, and the number of policies actually completed was 3,098, assuring £716,021, being £21,465 in advance of the new business for the previous year. The annual premiums on new' policies amounted to £23,502, in addition to single premiums for £537. Eighteen annuities were also granted, on which the purchase-money amounted to £7,756. The result was a net increase for the year of 936 policies for £208,754, against £199,300 in 1904 and £163,690 in 1903, a progressive state of affairs which, as I have before pointed out, indicates permanency in the business obtained by the Department. The Department has now on its books 44,809 policies, for the assurance at death or maturity of £10,468,316 (and £954,751 bonuses*), together with 328 immediate and deferred annuities for £49,305 per annum ; the whole bearing an annual premium income of £319,221. Civil Service Section. —ln the Civil Service section, included in the foregoing total business, there are 730 policies, assuring £110,883 ( and 2 >34 8 bonuses!), and entitling the survivors, at age 60, to annuities amounting to £34,758. The annual premium income of this section now amounts to £5,811. Income. The income of the Department for the year has been £321,759 for premiums, and £169,153 for interest, making, with other receipts, a total of £490,925, which represents an increase of £10,209 upon the total income of the previous year. The income from interest shows a considerable increase, and the average rate of interest realised on the total funds has risen from £4 Bs. 2d. per cent, in 1904 to £4 ios. 4d. per cent. Outgo. During the year 361 policies became void by death, for claims amounting to £120,690, being £20,269 less than was paid on this account in 1904, and considerably less than the amount provided for in the tables of mortality used by the Department. Three hundred and eleven policies matured during the year, the total claims in this respect amounting to £82,230, as against £80,241. Here again, as I have before intimated, the increasing yearly amount payable on endowment assurances maturing is a testimony to the permanent nature of a class of business whose progressive popularity proves that it meets the requirements of the people more effectually than any other form of assurance. The total amount paid by the Department, since its foundation thirty-six years ago, in respect of death claims and matured endowments, has been £2,995,204. The total expenditure, including taxes, commission, and triennial investigation expenses, amounted to £63,829. The ratio of expenses (including the land and income tax) to total income now stands at exactly 13 per cent. Accumulated Funds. —The total increase in the funds during the year amounted to £163,947, of which £6,953 was used to increase the investment fluctuation reserve, which now stands at £63,809. All the investments of the Department have been subjected to the usual triennial

• Since increased to £1, 257,661 by the recent division of profits. t Since increased to by the recent division of profits.

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scrutiny, and the additions to the investment fluctuation reserve have been made upon a basis which it is believed will, in accordance with the established practice of the Department, maintain the reserve in advance of all requirements. The balance of has been added to the assurance, annuity, and endowment funds, which now amount to The following short statement will give some idea of the growth of the Department, in this and other respects, during the past fifteen years : —

The Balance-sheet. —On the 31st December, 1905, the total assets of the Department amounted to and were invested as shown in the following comparative statement :—

It will be seen that there has been an increase of .£18,566 in local bodies' debentures, and an increase m loans on policies of which is smaller than usual, and is suggestive of easier financial conditions enabling more policyholders to avoid trenching upon their lifeinsurance accumulations. Properties acquired by foreclosure have virtually disappeared from the balance-sheet, the small amount shown being the balance due on a property sold on terms, which at the date of this report has been actually liquidated in cash. The Department now stands in the highly gratifying position of having no foreclosed properties on its hands. The asset which shows the greatest advance is that of mortgages on freehold property, which has been increased by and is now well into the third million. Triennial Investigation.—The valuation of the Department's liabilities on the 31st December last was completed early in the present year, and the full particulars are contained in the Actuary's report. After applying the severe test of a strict net premium valuation on the basis of H m 3i per cent, there was found to remain a surplus of over and above the liabilities valued at Of this surplus £16,887 was carried forward as a reserve against possible future fluctuations, and the sum of was applied to provide bonus additions to all participating policies. The individual bonuses were allotted by the compound-reversionary-bonus method introduced three years ago, which has given general satisfaction. The total reversionary bonuses allotted amounted to and policyholders in the General Section received larger bonuses than at the previous investigation. It is a matter for regret that on this occasion it has been found necessary to allot somewhat smaller bonuses to the Temperance policyholders than at the last distribution, not because there was not sufficient surplus available on the Department's business as a whole to provide increased bonuses for them also, but because the Department is obliged by law to distinguish between the mortality profit derived from the separate sections, General and Temperance. An honest effort (extending over twenty years) has been made to give abstainers the benefit which they claim as their due on account of superior vitality ; but unfortunately this intention has been frustrated by the small amount of support given to this separate section and by one or two other subsidiary causes not necessarily associated with the mortality of the Temperance Section, in respect of which there is, as will be seen from the report of the Actuary on the triennial valuation, no reason to think that it is inferior to that of the General Section. It is therefore considered that it would be to the advantage of every one concerned if the section were merged in the general business of the Department, thus effecting a considerable economy in the general administration and ensuring to the present Temperance policyholders the more .stable conditions as regards bonuses enjoyed by the General policyholders of the Department. J. H. Richardson, Government Insurance Commissioner.

Year. Number. Sum Assured. Bonuses. Annuities Policies in Force. „ Ratio of Total Kevenue AccnImllatec i Expenses irom Funds. (including Taxes) Premium Interest. (o Tota , , ncome . Income. 7,544,030 263,762 10,468,316 954,751 £ 5,66g 49.3°5 £ 223,610 321,759 £ 89,796 169,153 £ 1.715,193 3.822,577 Per cent. 165 130 1890 1905 .. 28,102 45,137 Improvement in 15 years 17.035 2,924,286 690,989 43.636 98,149 79,357 2,107,384 35 (Decrease).

At 31st December, 1904. At 31st Dei imber, 1905. Percentage Amount. of Total Assets. Class of Investment. Amount. Percentage of Total Assets. £ 1,966,913 667,950 660,262 i35.76« 123,580 102,383 103,659 1,004 52-3 per cent. 17-8 „ I7-5 3-6 ,, 3 - 3 27 2-8 Mortgages on freehold property Government securities Loans on policies Local bodies' debentures ... Landed and house properMiscellaneous assets Cash on current account ... Properties acquired by foreclosure... £ 2,132,039 667,965 679.493 154.334 122,436 103,119 67,614 804 54'3 P er cent. 17-0 17-3 3'9 3-i 27 17 O"O „ o-o Total ... £3'9 2 7.8o4 ioo-o per cent. £3.76i.5i9 ioo'o per cent.

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Revenue Account of the Government Life Insurance Department for the Year ended 31st December, 1905.

Balance-sheet of the Government Life Insurance Department on 31st December, 1905.

Amount of Funds at 1st January, 1905 Renewal premiums — Assurance, Annuity, and Endowment Slew premiums (including instalments of first year's premiums falling due in the year) Single premiums—Assurance and Endowment Consideration for Annuities Interest ?ees £ s. d. 3,665,582 16 11 292,052 0 8 21,414 0 10 537 0 0 7,756 0 6 169,152 17 8 12 10 8 Death-claims under policies, Assurance, £ s. d. including bonus additions .. .. 120,690 7 0 Endowment Assurances matured, including bonus additions .. .. 80,516 11 0 Endowments matured .. .. 1,713 7 5 Premiums returned on endowments .. 64 18 0 Bonuses surrendered for cash .. 1,568 8 10 Annuities .. .. .. .. 13,314 10 4 Surrenders .. .. .. 24,416 0 7 Loans released by surrender .. .. 20,863 18 1 Commission, new £14,962 18 1 renewal 2,305 12 1 17,268 10 2 Land and Income tax .. .. 9,989 5 5 Expenses of management— Salaries— Head Office ..£12,102 4 8 Branch offices and agents .. .. 6,613 4 3 Extra clerical assistance 1,386 13 5 Medical fees and expenses .. .. 4,398 7 11 Travelling-expenses .. 720 11 6 Advertising .. .. 1,079 18 2 Printing and stationery 1,238 0 7 Rent .. .. 2,485 0 0 Postage .. .. 1,284 1 8 Telegrams .. .. 380 7 8 Exchange .. .. 82 16 7 Office-furniture depreciation .. .. 312 0 3 General expenses .. 3,209 0 5 Triennial expenses .. 1,207 19 6 Compensation for loss of office.. .. 71 4 9 . 36,571 11 4 Investment Fluctuation Reserve .. 6,953 3 6 Amount of Funds, 31st December, 1905 3,822,576 15 7 £4,156,507 7 3 £4,156,507 7 3

Liabilities. £ s. d. Total Assurance, Annuity, and Endowment Funds (as per Revenue Account) .. .. .. 3,822,576 15 7 Claims admitted, proofs not yet completed .. .. .. .. 25,041 12 1 Annuities .. .. .. .. 83 8 2 Commission .. .. .. 278 17 10 Medical fees .. .. .. 375 18 0 Premium and other deposits.. .. 5,534 8 7 Fire-insurance moneys in suspense .. 16 0 0 Tontine Savings Fund No. 2 .. 10,088 18 2 Investment Fluctuation Reserve .. 63,808 19 11 Assets. £ s. d. £ a. d. Loans on policies .. .. .. 679,493 5 6 Government securities— Consolidated stock .. 625,900 0 0 Railway debentures (guaranteed by Government) .. 40,000 0 0 Debentures issued under " The Immigration and Public Works Act, 1870 " 2,064 14 5 667,964 14 '5 Municipal Corporation debentures .. 114,245 6 4 County securities .. .. .. 588 5 9 Harbour Board debentures .. .. 39,000 0 0 Town Board debentures .. .. 500 0 0 Landed and house property .. .. 122,436 4 11 Office furniture (Head Office and agencies) .. .. .. 2,656 16 3 Mortgages on property .. .. 2,132,039 10 1 Properties acquired by foreclosure' .. 803 14 11 Overdue premiums on policies in force .. 5,724 5 4 Outstanding premiums due but not overdue.. 38,773 6 0 ■ 44,497 11 4 Overdue interest .. 684 19 7 Outstanding interest due but not overdue.. 5,924 6 11 Interest accrued but not due .. .. 46,559 4 6 53,168 11 0 Agents'balances .. .. .. 2,171 4 3 Sundry accounts owing .. .. 624 14 0 Cash in hand and on current account.. 67,613 19 7 £3,927,803 18 4 £3,927,803 18 4 * Sold under agreement for sale and purchase; a trnount represents balance of purchase-moneys. Government Life insurance Department, 26t! h March, 1906. Audited and found correct. J. H. Richardson, Commissioner. W. B. Hudson, Secretary. J. K. Warburton, Controller and Auditor-General.

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Statement of Business

POLICIES ISSUED AND DISCON-

PARTICULARS OF POLICIES DISCON-

PROGRESS OF BUSINESS OF GOVERNMENT LIFE INSURANCE

ASSURANCES. TO" TOTAL. TAL. Whole-life and Term Assurances. YEAR 19O5. No. Aa S S uS, d sionary - Assured. Bonus. Annual Premiums. 2. Ordinary. 2. Extra. Annuities. 1. Immediate 2. Deferred,. Annual Sum Eever- Premiums. No- Af o ,viLi eionary ] Assured. j. ordiiiary. i 2. Extra. 1. Immediate. 2. Deferred.

'£ PO 1904 S inf0rC6at 3l8t December '| 44,19410,259,562 New business, 1905 .. .. 3,116 716,021 £ 1,001,518 t s. d. ( 309,118 6 6 1 3. O 46 5 2 ( 23,451 10 11 \ 50 14 8 £ •• d. 13,140 2 9) 31.524 1 °I J 6,604 16 4 14,631 £ 4,254,574 £ 670,956 £ s. d. (102,759 4 9) \ 2,189 14 9) f 59 9 01 I 0 13 8/ 4 964 Total .. .. .. 47,31010,975,583 Policies discontinued during 1905 2,173 507,267 Total Policies in force at 31st Dβ-\ . K 1Q7 in /loo 010 cember, 1905 J 45 > 137 10.468,316 1,001,518 1 332,569 17 5 I 3,096 19 10 j 16,507 16 o ( 160 17 6 151,269 o 1 J 1,964 1 5 14,635 4,265,538 670,956 1102,818 13 91 1 2,190 8 5f ( 4,415 4 81 1 98 12 1 J 46,767 515 155,656 27,344 954,751 I 316,062 1 5 I 2,936 2 4 13,548 2 71 35,756 16 1f 14,120 4,099,882 643,612 I 98,403 9 1) t 2,091 16 4/

How Discontinued. By Death Maturity Surrender 372 311 440 IOO,665 67,942J 97 >17° 17,508 12,532 5.642 ] i 3,I 79 H 4 | *° » 8 2,873 13 3 ;) 14 13 2 11 3,225 14 o I 23 14 11 f I,371 I4 5 245 77,598 15,756 ( 2,251 0 5) 66 19 if 117 32,695 3,379 I 898 2 3) 11 12 11J Surrender of Bonus Lapse 1,048 241,090 2,813 8,272 1,921 Expiry of Policy 2 400 1 \ i 1 1 ( 7,OSI IQ 4 I 1 27 17 2 } 51 14 4 4 2 o jl 185 ig 0] 1 15 o if 59 18 2 I 13 o 11 f 151 2 44,963 400 6,288 I I 1,088 2 31 13 13 1) 4 2 0) 155 15 0) 1 15 0/ 18 2 91 4 11 9) Expiry of Premium Miscellaneous 1Total • • 2.173J 2,173J I 507,267] 507,267! 46,767 46,767 1 16,507 16 0 I ! qR i 1 160 17 6 1 1|964 1 5 515 155,656 27,344 { 4,415 4 8) 98 12 1J |

T Potalissued 197,604123,785,201 i ,919,819 J734.°57 8 gj 65O7I 6 8 39,60011,696,5951,294,745] 16 7} Potalvoid 152,46713,316,885 965,068! ] 4 7 4| \ Iit jC6 8 o 25,480 7,596,713 651,133 ! j X q 3} 39,600 7,596,713 661,188 {""Jg » J|} 25,480 Totalin force .. ■■ 4-5,137 10,468,816 954,751 316,062 1 5 {35*756 16 1} 14 . 1204 . 099 . 882 643 > 612 !| 16 4} Extra Premiums .. .. .. .. .. j 2,936 2 4 ; Note.—The Ordinary Premium is the premium charged Induction of Premium by Bonus, &o. .. .. 222 7 o £319,220 10 9 £319,220 10 9 Wellington, 1st March, 1906.

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at end of Year 1905.

TINUED DURING THE YEAR 1905.

TINUED DURING THE YEAR 1905.

DEPARTMENT SINCE DATE OF ESTABLISHMENT TO 31st DECEMBER, 1905.

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

Approximate Cost of Paper.— Preparation, not given; printing (6,450 copies), £6 15s. 6<l

By Authority: John Mackay, Government Printer, Wellington.—l9o6.

Price 6d.]

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ASSURANCES. SIMPLE ENDOWMENTS, INVESTMENTS, ETC. Endowment Assurances. Annuity Assurances. ANNUITIES. Annual }■ Sum Vo Sum NtonSrl Premiums - i no *"w Deferred Annual N °- Assured. jSSSSf! !. ordinary. \ sionary ! Annuities. Premium. ;>. Extra. \ Bonus. _J N Annual Annuities. ' • Premium. ' L Xmmediate. ! g. Deferred. No. S X 8 m Annual sured. P«mium.

£ £ & g. d. 2, & s. d. £ s. d. 27,9526,836,172888,676 | 198, f 0 *g} 613 { 31,886 19 44,417 10 8 2,907 686,957 .. J *>** X ? «l 106 | 5,785 9 10 945 l<, 4 6,523,129 328,576 1 220 719 j 10 ] >™) 137,121 9 25,303 7 C 1,554 339,878 19,319; J 81 | 4 j 1,556 14 9 218 19 10 29,305j6,183,251309,257|| 209 g °| 688 | 35,564 14 55,144 7 2 __j I i [ j I 314 I 7 18 339 £ a. d. £ s. d. 13,140 2 91 GO 15 11 188 1 8) 46 19 6 819 6 6 107 14 7 14,147 10 11 677 81 758 £ 85,116 10,600 95,716 £ s. d. 3,117 18 2 472 7 1 3,590 5 3 11 30 4 0 407 6 8 62 7,533 2S1 11 8 328 77 10 7 13,740 4 3 696 88,133 3,308 13 7

1 1 .1 : 1 113. 22,617 1,787 J 3 j 294! 66,229 12,532J I ' 2,T (l\t ] 2} •• 26 6 | 56,9051 8,1tJ| i'™ ° 1} 27 { 892| 88ll 194,127 1,984, J 5 ' JJ 1 i J 40 17 9) ■• jl 8 9 2[! '' K--i ooq o 7 o ,q 01 J J 11,561 15 10| I I ,5o4 ooy,8/o iy,oiyH ri * K H o.L 1 133 6 0; 2a 10 0 3 ' 6 ygJ; 1,371 14 5 190 8 10 100 51 14 4 5 8 0 0 13 0 4 'lO41 1,556 14 9 218 19 10 11 .. 407 6 8 .. i .. 17 1,713 30! 3,9:20 15! 1,900 'I 79 19 2 141 2 6 CO 5 4 30 4 0 .. 0 4 8 1 111 30 4 0 407 6 8 62 7,533 281 11 8

i4,00311,774,5671622,798 I 41 ?'?,? J! ?l I; 811 l 1^ 1 : 41,811 9 46,042 17 6 529 265 2 0 28,259 17 4 !4,698 5,591,816818,586 j " 5} | 123 I "'sogl 6 > 246 U X1 898 10 4 201 187 X1 5 9 - 519 13 x 2,661199,9898,594 3 6 1,965 111,80615,285 9 11 ■q W fil R3251 kflQ "57 ' 209 . 128 1 °l 1 GSs' f 97 ' 000 1 'S5 564 14 55 144 7 ■> ' 321 •• 13 < 548 2 7 19,805 6,183,251309,257 J g44 g Q | | bBHN 1>g82 J. ,d5,5b4 14 55,144 7 2 ( ? 7? jp ? 192 1 8 I 696 88,183 3,308 13 7 1 i it the trfie age; the Extra, tlie additional premium imposed for auy reason whatsoever.