ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1925.

Appendix to the Journals of the House of Representatives, 1926 Session I, H-08

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1926. NEW ZEALAND

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1925.

Presented to both Houses of the Gerieral Assembly pursuant to the Provisions of the Government Life Insurance Act, 1908.

Government Insurance Office, Wellington, 10th May, 1926. Pursuant to the Government Life Insurance Act, 1908, I beg to make the following report upon the operations of the Department for the year ended 31st December, 1925. The Revenue Account, Balance-sheet, and Statement of Business are appended. Business. —The year has witnessed another substantial improvement in the. figures relating to all aspects of the business, and the progress made in the previous year has been more than maintained, as is seen from a comparison of the last three years : — New policies issued —- 1923. 1924. 1925. (a.) Number .. .. .. .. 4,754 5,149 5,830 (b.) Insuring .. .. .. .. £1,581,722 £1,718,842 Business in force — (a.) Number .. .. .. .. 60.545 61,804 63,775 (b.) Insuring (exclusive of bonus; .. .. £16,549,451 £17,190,783 £18,008,402 (c.) Average sum assured per policy in force . . £273 £278 £282 Income — £ £ £ (a.) Premiums .. .. .. .. 489,171 511,380 537,574 (&.) Interest .. .. .. .. 315,425 331,850 349'783 (c.) Annuity purchase-money.. .. 10,042 11,361 22,791 (d.) Total income .. .. .. .. 814,638 854,591 910,148 Outgo for claims — (a.) Deaths .. .. .. .. 166,797 185,777 182,131 (&.) Matured policies .. .. .. 235,409 229,359 251,781 Accumulated funds .. .. .. 6,222,485 6,448,658 6,731,118 The volume of new business completed during the year was a record, and—what is more important was obtained at a cost lower than the cost of the previous year. Interest. —The net effective rate of interest credited to the funds, after deduction of land and income tax from interest, was £5 9s. Id., which is again in excess of the yield obtained during any previous year. The maintenance of the highest yield possible from the investments is necessary to a life office as an indispensable element in the production of bonuses. Not only this, but, in view of the constantly improving vitality of annuitants, life offices would sustain serious losses in connection with their annuity contracts but for the compensating advantage of a satisfactory margin in the interest yield ; in this respect the Department stands well—an important fact in view of its annuity business being larger than the New Zealand annuity business of all other life offices combined. General.—During the year several important amendments to Acts regulating life-assurance business in this country were sanctioned. By the Life Insurance Amendment Act, 1925, the provisions relating to the protection of policies from bankruptcy were improved, and extended facilities were secured for vesting policies of limited values in persons entitled to them without the necessity for producing probate or letters of administration.

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As this is the last report which I shall be making, I should like to draw attention to the following achievements during my three years' control, which speak for themselves : —• (1.) A reduction in the uninvested balance at the end of the year from £205,142 in 1923 to £65,698 in 1924 and to £18,185 in 1925. (2.) An increase in the net effective rate of interest from £5 6s. Bd. per cent, in 1923 to £5 7s. 7d. per cent, in 1924 and to £5 9s. Id. per cent, in 1925. (3.) An all-round reduction in expense ratios, namely : — 1923. 1924. 1925. (a.) Total expenses to total premium income .. . . 18-234 18-460 17-998 (b.) Total expenses to total income .. .. .. 11-174 11-292 11-081 (c.) " Renewal " expenses to total premium income . . 8-7 8-8 8-2 (d.) " New business " expenses to new annual premiums .. 111-5 102-1 100-0 In addition, not only was the new business of the year the greatest ever transacted in a single year, but the increase as compared with the previous year (£191,171) is the greatest increase ever made in a year. lam also able to point to the fact that the rates of bonus are very much higher than have ever before been allotted in the history of the Department, whilst at the same time the reserves stand on the strongest basis in use amongst the offices of Australasia : thus, in short, I can point to an increased interest yield, reduced expense ratios, greater new business, increased bonuses, and a much stronger basis of actuarial reserves. I have abundant evidence that new hope has been instilled into the minds of the Department's field men : the increased new business returns in themselves prove this. In addition, I recommended to the Government legislation, which was approved, and passed last session, extending the powers of the Department to include (1) the transaction of sinking-fund, capital redemption, and other business ; (2) facilities which will permit the Department to safely reduce its bank balance to the lowest point, and thereby enable the funds to be more closely invested ; (3) power to make an annual distribution of bonuses in place of the present triennial distribution. It bad been my intention to commence distributing bonuses annually as from the end of this year, a reform which I feel sure would meet with the unqualified approbation of policyholders and the public. In conclusion I have to say that on entering into office I decided to make it my paramount duty to strive for the best interests of the policyholders, to whom the funds belong, and of the Department in general; on leaving office it is a source of pride to be able to feel that I have accomplished something in this direction. A. T. Traversi, F.1.A., F.0.A.5., Commissioner.

Revenue Account of the Government Life Insurance Department for the Year ended 31st December, 1925. £ s. d. £ s. d. Amount of Funds at Ist January, 1925 6,448,658 5 7 Death claims under assurance policies, Renewal premiums—Assurance, An- including bonus additions .. 182,058 1 0 nuity, and Endowment .. .. 478,583 12 9 Endowment Assurances matured, inNew premiums (including instalments eluding bonus additions .. .. 245,151 18 0 of first year's premiums falling due Endowments matured .. .. 6,628 18 0 in the year) .. .. .. 54,873 0 0 Premiums returned on endowments .. 72 14 8 Single premiums—Assurance and En- Bonuses surrendered for cash .. 4,141 6 9 dowment .. .. .. 4,116 18 3 Annuities .. .. .. 21,451 710 Consideration for Annuities .. 22,791 9 0 Surrenders .. .. .. 30,746 7 1 Interest and Rent.. £364,702 16 7 Loans released by surrender .. 36,582 9 7 Less land and income Commissions, new* .. £36,745 7 9 tax, £10,870 3s. lid; „ renewal 3,645 4 8 property expenses, 40,390 12 5 £4,049 5?. .. 14,919 8 11 Contribution to Superannuation Fund 1,156 11 0 349,783 7 8 Expenses of management— Salaries £ s. d. Head Office .. 23,706 17 9 Branch offices and agents . . 11,384 4*B Extra clerical assistance .. .. 1,961 6 9 Medical fees and expenses .. .. 6,562 1 4 Travelling-expenses 902 10 11 Advertising .. 337 9 9 Printing and stationery 1,831 17 4 Rent .. .. 5,748 1 0 Postage and telegrams 1,529 6 3 Exchange .. 34 2 8 General expenses .. 4,810 9 8 Triennial expenses .. 500 0 0 59,308 8 1 Amount of funds, 31st December, 1925 6,731,117 18 10 £7,358,806 13 3 £7,358,806 13 3 ♦Including agents' allowances.

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Balance-sheet of the Government Life Insurance Department on 31st December, 1925. Liabilities. Assets. £ s. d. £ s. d. £ s d. Total Assurance, Annuity, and En- Loans on policies .. .. .. 915,231 1 0 dowment Funds (as per Revenue Government securiAceount) .. .. .. 6,731,117 18 10 tiesClaims admitted, proofs not yet com- Consolidated stock 625,900 0 0 pleted .. .. .. 46,194. 6 8 Debentures issued Annuities .. .. .. 458 14 0 under the auCommission .. .. .. 1,504 5 5 thority of the FiMedical fees .. .. .. 520 16 0 nance Act, 1915 40,000 0 0 Premium and other deposits .. 4,619 10 2 New Zealand InSundry creditors .. .. .. 3,450 16 3 scribed Stock — Accident and Fidelity Fund .. 2,040 0 0 War Loans .. 1,200,570 0 0 Investment Fluctuation Reserve .. 204,322 12 7 New Zealand Inscribed Stock—• Finance Act, 1919 50,000 0 0 New Zealand Inscribed Stock —• Discharged Soldiers Settlement Loan .. 110,000 0 0 New Zealand Inscribed Stock issued under the Aid to Public Works and Land Settlement Act, 1921 .. 150,000 0 0 2,176,470 0 0 Municipal Corporation debentures .. 217,460 13 7 County securities .. .. .. 53,973 19 11 Harbour Board debentures .. 31,300 0 0 Town Board debentures .. .. 38,024 0 7 Road Board debentures .. .. 21,800 0 0 Drainage Board debentures .. 1,898 14 11 Power Board debentures .. .. 692,389 1 7 Landed and house property .. 130,868 4 2 Landed and house property (leasehold) 1,505 15 3 Mortgages on property .. .. 2,520,340 0 9 Properties acquired by foreclosure .. 11,800 15 9 Overdue premiums on £ s. d. policies in force .. 8,106 7 4 | Outstanding premiums due but not overdue 48,901 13 6 — 57,008 0 10 Overdue interest .. 4,298 11 9 Outstanding interest due but not overdue 7,295 8 6 Interest accrued but not due .. 88,126 2 4 99,720 2 7 Agents'balances .. .. .. 4,279 16 3 Sundry debtors .. .. 1,974 0 10 Cash in hand and on current account 18,184 11 11 £6,994,228 19 11 £6,994,228 19 11 A. T. Traversi, F.1.A., F.C.A.S., Commissioner. C. Gostelow, F.1.A., Actuary aid Secretary. Government Life Insurance Department, 22nd April, 1926. The Audit Office, having examined the Revenue Account and Balance-sheet, and compared them with the relative books, documents, and securities, hereby certifies them to be in accordance therewith. G. F. C. Campbell, Controller and Auditor-General.

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Statement of Business

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———— : : ——— TOTAL. : Whole-life and Term Assurances. YEAR 1925. Annual Annuities. I Annual <9i,m Rever- I Premiums. j i Immediate or v Sum ' ® ever " Premiums. No ' assured. 1. Ordinary. entered upon. 1 °' assured., 1 1. Ordinary. I Bonuses.] 2 . Extra. | 2. Deferred. | i 3011 " 568 - g. Extra. POLICIES ISSUED AND DISCON- £ £ £ s. d. £ s. d. £ £ i £ a. d. Policies in foroe at 31st 61,804 17,190,7831,696,381 f 520,341 9 1121,017 3 9)11,2948,981,110 656,3721 / 95,841 19 5) December, 1924 \ 2,049 16 4 2,492 10 11 j \ 993 16 7 J New business .. .. 5,830 1,910,013 .. I 60,768 9 1 2,248 16 11 \ 640 302,000 .. I 8,406 10 0 1 \ 182 11 8 (-) 198 17 11 J 1 54 6 3 j Total.. .. 67,68419,100,7961,696,3811 581,109 19 023,266 0 8111,934 4,283,110 656,372 1104,248 9 5 ) { 2,232 8 0 2,293 13 0J ( 1,048 2 10 f Polioies discontinued 3,859 1,092,394 111,454 1 33,259 0 4 858 9 8[ 675 274,782 39,485 / 6,486 16 3) during 1925 ( 127 1 8 45 18 4 [ ( 63 17 1 J Total policies in (orce at 63,775j 18,008,402 1,584,927 / 547,850 18 8 22,407 11 0)11,259 4,008,328 616,887 / 97,761 13 2) 31st December, 1925 j | 2,105 6 4 2,247 14 8J I 984 5 9 J PARTICULARS OP POLICIES DISCON How discontinued. ByDeath .. .. 510 140,135 38,899 / 3,910 8 2 858 9 8) 283 93,995 32,222./ 2,141 7 2 ) I 40 6 9 J | 31 19 3 f Maturity .. .. 1,069 201,737 45,726 / 7,818 16 11) t 16 8 Of Surrender.. .. - 901 275,019 18,697 / 8,629 4 10) .. I 111 47,358 5,781 / 1,192 13 6) | 40 7 6[ 45 18 4 j ( 27 18 8 j" Cancellation .. 219 64,450 9 j 1,886 4 5j .. 21 10,400 .. j 291 1 6[ Lapse .. .. 1,160 411,053 8,123 / 11,014 6 0) .. 260 123,029 1,482 ( 2,861 14 1 ) t 29 19 5 J | 3 19 2 J Total discontinued during 3,859 1,092,394 111,454 1 33,259 0 4 858 9 8| 675 274,782 39,485 / 6,486 16 3 ) year 1925 \ 127 1 8 45 18 4) 1 63 17 1 | PROGRESS OF BUSINESS OP THE GOVERNMENT LIFE INSURANCE Total issued .. .. 179,354 47,857,426 4,384,742 j 1,4 |g'ggg 8 } 109,314 4 2 49,212I16,702,509 2,088,868 j 4 ®®' J 2} Total void .. .. 115,579 29,349,024 2,799,815 j jf gj 34,658 18 6 37,953jll,694, 1811,471,981 j 18 g| Total in force .. 63,775 18,008,402 1,584,927 547,850 18 8 24,655 5 8 11,259 4,008,328 616,887 97,761 13 2 Extra Premiums .. .. .. 2,105 6 4 .. .. | .. i .. 984 5 9 £549,956 5 0 £98,745 18 11 Note.—The " ordinary " premium is the premium charged j I Wellington, 30th March, 1926.

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at End of Year 1925.

Approximate Cost of Paper.—Preparation, not given ; printing (1,975 copies), £12 7s. 6d. By Authority: W. A. G. Skinner, Government Printer, Wellington.—l 926. Price 6d.]

ASSURANCES. SIMPLE ANNUITIES. ENDOWMENTS, Endowment Assurances. Annuity Assurances. INVESTMENTS, ETC. Annual !• Sum Annuities. Annuities. I V,Sum Annual xt Sum Rever- Premiums. i 1. Immediate or Annual N Annual : 1. Immediate or No 2 Rever'- Premiums. No - assured. 1. Ordinary. I No " si omrv" ! enU " ed upon - Premiums - Premiams. i entered upon. ' , g iolmry 1. Ordinary. Bonuses.; g. Extra , j| | \S. Deferred. | 2. Deferred. 1 Bonuses. hxtra - TINUED DURING THE YEAR 1925. £ £ £ 8. d. £ £ 8. d. £ s. d. £ s. d. £ a. d. £ £ a. d. 48,00512,812,7361,020,6-23 (413,065 3 1)| 45 j 9,185 288 5 5 ) 479 4 8 ( 408 .. 20,728 18 4 ) 2,048 ( 387,752 10,436 16 111 | 1,055 19 9) | 1,710 1,892 10 11 f t i 518 5 10 600 0 0 f N 17,676 .. [ 5,0181,567,413 .. (51,334 3 11)1 .. .. j ( + )198 17 11 I .. ( 24 .. 2,049 19 01 148 ( 40,600 1,027 15 2) | 128 5 5) t (-)198 17 11 J .. .. J 1 j J 53 023 14,380,1491,020,623(464,399 7 0) 45 f 9,185 487 3 4| 479 4 8 ( 432 .. 22,778 17 4 ) 2,196 ( 428,352 ill, 464 12 it \ 1,184 5 2 f j j 1,710 1,693 13 0)1 1 4 518 5 10 600 0 0 J 1 17,676 j .. J 3,016 782,062 70,315 j 25,712 2 8 ) 2 ( 2,000 i 23 2 81 j 104 19 3 ( 19 .. 835 7 0 I 147 1 33,550 955 2 71 1 63 4 7 J | 1 350 45 18 4fl {.. .. ) \ 1,304 .. j 50,00713 598,087 950,308 ( 438,687 4 91 ■ 43 f 7,185 464 0 8), 374 5 5 ( 413 .. 21,943 10 4 1 2,049 ( 394,802 10,509 9 6) { 1,121 0 7) 1 1,360 1,647 14 8j| \ 4 518 5 10 600 0 0 J ( 16,372 .. j — TINUED DURING THE YEAR 1925. _ _ , 207j 45,990 6,677 | 1,769 1 0) lj 150 \ 23 2 8| j 19 .. 835 7 Oj .. 1,025 196,187 44,398 / 7,584 4 II .. |( .. .. I .. •• .. •• 4i I 5,550 234 12 10 1 I 16 8 0) I 325 .. | I 1,003 712 207,511 12,891 ( 6,863 2 7) ll j 100 j 4 18 10 .. .. .. 77 J 20,050 568 9 11 L I 12 8 10 J I 25 45 18 41 1 •• •• J 194 53,450 9 | 1,578 10 1 j .. .. •• •• •• •• 4 | 600 16 12 10 I 878 278,924 6,340 ( 7,917 4 6 1 .. ( 1,750 .. ] 100 0 5 ., .. .. 22 ( 7,350 135 7 0 j \ 26 0 3 J I .. I 1 301 .. I 3 016 782,062 70,315 ( 25,712 2 31 2 ( 2,000 23 2 81 104 19 3 f 19 .. 835 7 0) 147 J 33,550 955 2 7} { 63 4 7 I |1 350 45 18 4/ .. .. J 1 1,304 DEPARTMENT SINCE DATE OF ESTABLISHMENT TO 31st DECEMBER, 1925. 121655 30,530,678 2,264,718 ™ 11 8j 1>106 j 160,450 J 57497 16 6 8)619 15 8 1,050 866 6 8 51,816 7 8 6,331 j 9 ® 3 |™> 29,819 111 71,64816,932,5911,314,410 {^20j 273 18 1/ 1,063 1 "Jill } 55386 1 2 8 ' 245 10 3 633 348 0 10 29,272 17 4 4,282 j Jo o( 50,00713,598,087 950,308 438,687 4 9 43 { J' 1 ®® }2,111 15 4 374 5 5 417 518 5 10 22,543 10 4 2,049 1 394,802 10,509 ) 6 v *' ' j { 16,372 .. 1,121 0 7.. 5 4 £374 5 5 £518 5 10 £10,509 9 6 J at the true age; the "extra," the additional premium charged for any reason whatsoever. I A. T. Traversi, F.I.A., E CA.S. Commissioner. C. Gostelow, F.I.A., Actuary and Secretary.