ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1942

Appendix to the Journals of the House of Representatives, 1943 Session I, H-08

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1943 NEW ZEALAND

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1942

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

Government Insurance Office, Wellington, 14th May, 1943. I have the honour to submit the following report upon the transactions of the Department for the year ended 31st December, 1942, and its position at that date. The Revenue Account, Balance-sheet, and Statement of Business are appended. New Business and Amount of Business in Force.—New business for the year amounted to 4,888 policies, assuring the sum of £2,218,367, the premiums thereon being £45,593 per annum. Thirty annuities were also granted, the purchase-money being £24,089. The total business in force at the end of the year (including immediate, deferred, and contingent annuities for £97,998 per annum) comprises 96,858 policies, bearing an annual premium income of £812,059. The total sum assured is £33,388,155, to which reversionary bonuses amounting to £3,620,884 have been added. Income. —The total income amounted to £1,386,181, made up as follows : Premium income, £840,903 ; interest income (net), £521,189 ; annuity-purchase money, £24,089. The total for the year exceeded that for the previous year by £26,125. Outgoings.—During the year 2,095 policies became claims by the death of the policyholders and by maturity, the payment involved being £753,298. The total amount paid in claims since the inception of the Department amounts to £19,172,300. Accumulated Funds. —Assurance, annuity, and endowment funds, apart from special reserves of £383,202, now stand at £12,208,184, an increase of £353,930 over the previous year. Annual Bonus. —In view of conditions arising out of the war, it was decided last year to postpone the allotment of the surplus. Experience has shown that this decision was a prudent one, as the death claims in respect of the war have been heavy. The Actuary's report appended hereto discloses a surplus of £342,130, excluding interim bonuses paid during the year. It has been decided as regards the allotment of the surplus to follow the course adopted last year. Policyholders generally have expressed approval of the Department's action. Interim bonuses will be granted at rates approximately twothirds of the 1940 rates on all policies becoming claims during the year. Expense Ratios. —The ratio of expenses to (a) total income and (b) premium income for 1940,. 1941, and 1942 is as follows : — Ratio of Expenses to 1940. 1941. 1942. (a) Total income .. .. .. 7-97 8-62 7-62 (b) Premium income .. .. .. 12-75 13-81 12-21 A large number of the Department's officers are engaged on active service. I should like to pay a tribute to the good work done by members of the depleted staff, who have cheerfully undertaken the extra duties occasioned by the war. It is due to their efficiency, zeal, and loyalty that the Department holds such a high position in the keenly-competitive field of life insurance. In conclusion, I may say that this report practically coincides with the occasion of my retirement after more than forty-two years' service with the Department. The Government Insurance Department was founded in 1869; it was a success from the outset, and epidemics, depressions, and wars have left it in an unassailable position. It can face with confidence whatever the future holds in. store. I am proud to have been associated with a Department which has earned an enviable record for its just and liberal dealings with its clients, and which is universally recognized as a successful example of State enterprise. W. E. Arnold, Commissioner.

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Revenue Account of the Government Life Insurance Department for the Year ended 31st December, 1942 £ £ Amount of funds at Ist January, 1942 .. 11,854,254 Death claims under assurance policies, Renewal premiums: Assurance, annuity, including bonus additions .. .. 425,129 and endowment, less reinsurance premiums 762,520 Endowment assurances matured, including New premiums (including instalments of first bonus additions .. .. .. 317,321 year's premiums falling due in the year), Endowments matured .. .. .. 10,046 less reinsurance premiums .. .. 50,084 Premiums returned on endowments .. 802 Single premiums : Assurance and endowment 28,299 Bonuses surrendered for cash .. .. 3,561 Consideration for annuities .. .. 24,089 Annuities .. .. .. .. 35,643 £ Surrenders .. .. .. .. 23,855 Interest, rent, and other income .. 534,858 Loans released by surrender .. .. 41,328 Less property expenses .. 13,669 £ 521,189 Commission, new .. .. 36,572 Commission, renewal .. .. 5,950 42,522 Contribution to Public Service Superannuation Fund .. .. .. .. 594 Land and income tax .. .. .. 42,216 Agents'retiring-allowances .. .. 2,011 Expenses of management .. .. 58,910 War-damage-insurance premiums .. 1,613 Property depreciation .. .. .. 6,700 Transfer to Investment Reserve Account .. 20,000 Amount of funds, 31st December, 1942 .. 12,208,184 £13,240,435 £13,240,435 Balance-sheet of the Government Life Insurance Department on 31st December, 1942 Liabilities £ Assets £ Total assurance, annuity, and endowment Loans on policies .. .. .. 1,089,140 funds (as per Revenue Account) .. 12,208,184 New Zealand Government securities .. 3,618,532 Claims admitted, proofs not yet completed 126,835 Loans to local bodies .. .. .. 2,161,098 Annuities .. .. .. .. 492 Landed and house property .. .. 505,519 Medical fees .. .. .. .. 224 Landed and house property (leasehold) .. 343 Premium and other deposits .. .. 30,419 Mortgages on property .. .. .. 4,947,154 Sundry creditors .. .. .. 14,555 Properties acquired by foreclosure .. 21,827 Accident and Fidelity Fund .. .. 5,000 Ovordue premiums on policies in £ Investment Reserve Account .. .. 378,202 force .. .. .. 3,426 £ Outstanding premiums due but not Sinking funds on local-body loans.. 2,470 overdue .. .. .. 84,497 Interest accrued thereon .. 30 87,923 2,500 Overdue interest .. .. 3,322 Outstanding interest due but not overdue .. .. .. 10,717 Interest accrued but not due . . 112,445 ——— 126,484 Sundry debtors .. .. .. 3,492 Office furniture and fittings .. .. 2,500 Cash in hand and on current account .. 202,399 £12,766,411 £12,766,411 W. E. Arnold, Commissioner. J. W. Macdonald, Secretary. Government Life Insurance Department, 22nd April, 1943. 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. — Cyril G. Collins, Controller and Auditor-General.

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Statement of Business for the Year 1942

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Annual Premiums. Annuities. Year, 1042. Number. Sum assured. i ?" ary Ordinary. Extra. Immediate. Deferred. Policies issued and discontinued during the Year 1.942 £ £ £ s. d. £ s. d. £ s. <1. £ s. d. Policies in force at 31st 95,581 32,445,977 3,814,177 796,627 6 0 3,275 9 5 34,567.10 4 61,064 0 10 December, 1941 Newbusiness .. .. 4,918 2,218,367 .. 45,498 0 1 95 6 4 1,911 16 10 2,358 14 0 Bonus allotted Total .. 100,499 34,664,344 3,814,177 842,125 6 1 3,370 15 9 36,479 7 2 63,422 14 10 Policies discontinued 3,641 1,276,189 193,293 33,664 12 1 -227 17 10 1,400 1 6 503 19 0 during 1942 Total policies in force at 96,858 33,388,155 3,620,884 808,460 14 0 3,598 13 7 35,079 5 8 62,918 15 10 31st December, 1942 Particulars of Policies discontinued during the Year 1942 How discontinued — £ £ £ s. d. £ s. d. £ s. d. £ s. d. By death .. .. 1,085 344,775 84,589 10,871 16 1 88 10 6 1,452 6 6 20 0 0 By maturity.. .. 1,010 247,700 75,118 9,216 10 2 14 19 2 By surrender .. 507 191,997 19,303 4,348 5 0 4 12 9 .. 144 0 0 By change to other tables 14 4,498 199 109 2 9 By cancellation .. 114 36,818 7 866 5 5 By lapse .. .. 911 450,401 14,077 8,252 12 8 -336 0 3 -52 5 0 339 19 0 Total discontinued during 3,641 1,276,189 193,293 33,664 12 1 -227 17 10 1,400 1 6 503 19 0 year 1942 _ Progress of Business of the Government Life Insurance Department since Date of Establishment to 31st December, 1942 £ £ £ s. d. £ s. d. £ s. d. Total issued .. .. 282,108 84,401,219 9,828,357 2,362,839 12 8 41,768 2 2 228,081 10 0 Total void .. .. 185,250 51,013,064 6,207,473 1,554,378 18 8 38,169 8 7 130,083 8 6 Total in force .. 96,858 33,388,155 3,620,884 808,460 14 0 3,598 13 7 97,998 1 6

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ACTUARY'S REPORT ON THE VALUATION OF THE GOVERNMENT INSURANCE DEPARTMENT AS AT 31st DECEMBER, 1942

Presented to both Houses of the General Assembly pursuant to Section 40 of the Government Life Insurance Act, 1908

12th May, 1943. In accordance with your instructions, a valuation of the Department's liabilities under its policies has been made as at 31st December, 1942, with the object of ascertaining the net surplus available for distribution amongst the policyholders, and in accordance with section 40 of the Government Life Insurance Act of 1908, and amendments, I have the honour to report as follows:— The liabilities arise in respect of 96,858 policies assuring, inclusive of bonus additions, the sum of £37,009,039 and £97,998 immediate and deferred annuities per annum, the Office premiums thereon amounting to £812,059 per annum. The bases adopted for the valuation were as follows : — (а) Endowments : 3 per cent, interest without mortality : (б) Temporary Assurances : The proportion of the premiums corresponding to the unexpired risk: (c) All other Classes of Assurance : The O m mortality table with 3 per cent, interest: (d) Annuities : The a (m) and a (/) mortality tables with 3 per cent, interest. The net premium method of valuation was employed in respect of groups (a) and (c) above, and, in addition to the liability brought out on that basis, reserves were included for future bonuses, immediate payment of claims, and other contingencies, including those likely to arise out of the present war. The valuation disclosed a total surplus of £353,773, as follows : — £ Total funds at 31st December, 1942 .. .. .. .. 12,208,184 Less value of liabilities .. .. .. .. .. 11,866,054 Net surplus .. .. .. .. .. 342,130 Interim bonus paid during year .. .. .. .. .. 11,643 Total surplus .. .. .. .. .. £353,773 In view of circumstances arising out of the war, I recommend that the above net surplus be carried forward and that interim bonuses be allotted on the sums assured and existing bonuses of all policies becoming claims at the following rates for each annual premium paid since 31st December, 1940 : — Double-endowment assurances (present issue) and pure endowments : 10s. per cent. All other participating assurances: 15s. per cent. S. Becking,sale, Actuary. The Government Insurance Commissioner, Wellington.

Approximate Cost of Paper.—Preparation, not given ; printing (808 copies), £7.

Authority: E. V. Paul., Government Printer, Wellington.—l 943.

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