ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1943

Appendix to the Journals of the House of Representatives, 1944 Session I, H-08

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1944 NEW ZEALAND

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1943

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

Government Insurance Office, Wellington, 18th April, 1944. I have the honour to submit the following report upon the transactions of the Department for the year ended 31st December, 1943, and its position at that date. The Revenue Account, Balance-sheet, and State of Business are appended : —■ New Business and Amount of Business in Force. —New business for the year amounted to 5,111 policies, assuring the sum of £2,674,836, the premiums thereon being £56,330 per annum. Twenty-six annuities were also granted, the purchase-money being £20,365. The total business in force at the end of the year (including immediate, deferred, and contingent annuities for £101,220 per annum) comprises 98,477 policies, bearing an annual premium income of £840,241. The total sum assured is £34,815,381, to which reversionary bonuses amounting to £3,444,497 have been added. Income. —The total income amounted to £1,402,421, made up as follows : Premium income, £849,231 ; interest income (net), £532,825 ; annuity-purchase money, £20,365. The total for the year exceeded that for the previous year by £16,240. Outgoings.—During the year 2,001 policies became claims by the death of the policyholders and by maturity, the payment involved being £720,317. The total amount paid in claims since the inception of the Department amounts to £19,892,616. Accumulated Funds. —Assurance, annuity, and endowment funds, apart from special reserves of £365,856, now stand at £12,664,713, an increase of £456,529 over the previous year. Bonus Distribution.— Owing to conditions arising out of the war, no allotment of the surplus was made for the years 1941 and 1942, but an allotment for the past three years has now been arranged. Interim bonuses have been paid on all participating policies which have become claims since the previous allotment. The bonus investigation has been carried out by the Actuary, and his report appended hereto discloses a net cash surplus of £503,696 (excluding interim bonuses paid) for the past three years. Of this sum, £484,417 is being distributed in the form of compound reversionary bonuses upon the sum assured and existing bonuses. The total reversionary bonuses thus allotted for the three years amount to £793,230. The rates of bonuses allotted compare favourably with those of other life offices operating in New Zealand. Expense Ratios. —The ratio of expenses to (a) total income and (b) premium income for 1941, 1942, and 1943 is as follows :— Ratio of Expenses to 1941. 1942. 1943. (a) Total income .. .. .. 8-62 7-62 8-15 (b) Premium income .. .. .. 13-81 12-21 13-15 The slight increase in 1943 is due to the greater volume of new business. The Department conducts its business at a very low cost; in fact, it is in the class of life offices whose expense rates are the lowest in the world. General. —Mr. W. E. Arnold retired from the office of Commissioner during the year, having served in that capacity for ten years and having completed over forty-two years of good and faithful service to the Department. The results of the Department's trading during the year may be reviewed with much satisfaction. Considering the greatly reduced field staff, the new business obtained has been particularly satisfactory. A large number of the Department's officers are on active service. Excellent work has been done by the members of the depleted staff, who have cheerfully carried out the extra duties imposed on them. I wish to take this opportunity of paying a tribute to their efficiency, zeal, and loyal co-operation which have enabled the Department to continue to give good service to the policyholders and to maintain its position as one of the leading life-insurance offices in the Dominion. J. W. Macdonald, Commissioner.

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Revenue Account of the Government Life Insurance Department for the Year ended 31st December, 1943 £ £ Amount of funds at Ist January, 1943 .. 12,208,184 Death claims under assurance policies, Renewal premiums: Assurance, annuity, including bonus additions .. .. 341,677 and endowment, less reinsurance premiums 778,297 Endowment assurances matured, including New premiums (including instalments of first bonus additions .. .. .. 364,657 year's premiums falling due in the year), Endowments matured .. .. .. 12,701 less reinsurance premiums .. ' .. 51,622 Premiums returned on endowments .. 1,282 Single premiums : Assurance and endowment 19,312 Bonuses surrendered for cash .. .. 2,132 Consideration for annuities . . .. 20,365 Annuities .. .. .. • ■ 36,296 £ Surrenders .. .. .. .. 26,401 Interest, rent, and other income .. 546,081 Loans released by surrender .. .. 33,225 Less property expenses .. 13,256 £ 532,825 Commission, new .. .. 39,294 Commission, renewal .. .. 6,327 45,621 Contribution to Public Service Superannuation Eund .. .. . . .• 596 Land and income tax .. .. .. 6,503 Agents'retiring-allowances .. .. 2,074 Expenses of management .. .. 62,623 War-damage-insurance premiums .. 3,431 Property depreciation .. .. .. 6,673 Amount of funds, 31st December, 1943 .. 12,664,713 £13,610,605 £13,610.605 Balance-sheet of the Government Life Insurance Department on 31st December, 1943 Liabilities £ Assets £ Total assurance, annuity, and endowment Loans on policies .. .. ■■ 1,001,200 funds (as per Revenue Account) .. 12,664,713 New Zealand Government securities .. 3,981,131 Claims admitted, proofs not yet completed 117,400 Loans to local bodies .. .. .. 2,592,922 Annuities .. ... .. .. 625 Landed and house property .. .. 500,545 Medical fees .. .. .. • • 371 Landed and house property (leasehold) ... 172 Premium and other deposits .. .. 23,405 ; Mortgages on property .. .. .. 4,817,442 Sundry creditors .. .. .. 10,649 Properties acquired by foreclosure .. 26,934 Accident and Fidelity Eund .. .. 5,000 Overdue premiums on policies in £ Investment Reserve Account .. .. 360,856 force .. .. . • 2,683 £ Outstanding premiums due but not Sinking funds on local-body loans.. 2,694 overdue .. .. .. 69,127 Interest accrued thereon .. 33 71,810 2,727 Overdue interest .. .. 2,760 Outstanding interest due but not overdue .. .• •. 14,493 Interest accrued but not due .. 116,899 134,152 Sundry debtors .. .. .. 4,974 Office furniture and fittings .. .. 2, 000 Cash in hand and on current account .. 52,4(54 £13,185,746 £13,185,746 J.. W. Macdonald, Commissioner. H. L. Ryan, Secretary. Government Life Insurance Department, 10th March, 1944. 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 1943

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Annual Premiums. I Annuities. Year, 1043. Number. Sum assured. 1 ' 5 ' i ! Ordinary. Extra. i Immediate. Deferred. Policies issued and discontinued during the Year 1943 £ £ £ s. d. £ s. d. £ s. d. £ s. d. Policies in force at 31st 90,858 33,388,155 3,620,884 808,460 14 0 3,598 13 7 35,079 5 8 62,918 15 10 December, 1942 New business .. .. 5,137 2,674,836 .. 56,201 13 7 128 12 5 1,889 8 8 3,450 0 0 Bonus allotted Total .. 101,995 36,062,991 3,620,884 864,662 7 7 3,727 6 0 36,968 14 4 66,368 15 10 Policies discontinued 3,518 1,247,610 176,387 29,746 6 4 —1,597 16 7 1,767 10 10 349 10 0 during 1943 Total policies in force at 98,477 34,815,381 3,444,497 834,916 1 3 5,325 2 7 35,201 3 6 66 019 5 10 31st December, 1943 Particulars of Policies discontinued during the Year 1943 How discontinued— £ £ £ s. d. £ s. d. £ s. d. £ s. d. By death .. .. 872 272,979 69,050 7,746 17 6 52 2 5 1,767 12 10 30 0 0 By maturity.. .. 1,129 288,999 81,753 10,500 9 4 7 4 8 By surrender .. 509 188,393 13,634 3,417 0 0 18 18 5 .. 247 10 0 By change to other tables 29 10,739 1,012 225 84 088 .. 72 00 By cancellation .. 98 39,254 .. 952 13 9 By lapse .. .. 881 447,246 10,938 6,903 17 5 -1,676 10 9 -0 2 0 Total discontinued during 3,518 1,247,610 176,387 29,746 6 4 —1,597 16 7 1,767 10 10 349 10 0 year 1943 Progress of Business of the Government Life Insurance Department since Date of Establishment to 31st December, 1943 £ £ £ s. d. £ s. d. £ s. d. Total issued .. .. 287,245 87,076,055 9,828,357 2,419,041 6 3 41,896 14 7 233,420 18 8 Total void .. .. 188,768 52,260,674 6,383,860 1,584,125 5 0 36,571 12 0 132,200 9 4 Total in force .. 98,477 34,815,381 3,444,497 834,916 1 3 5,325 2 7 101,220 9 4

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ACTUARY'S REPORT ON THE VALUATION OF THE GOVERNMENT INSURANCE DEPARTMENT AS AT 31st DECEMBER, 1943

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

4th April, 1944. In accordance with your instructions, a valuation of the Department's liabilities under its policies has been made as at 31st December, 1943, 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 98,477 policies assuring, inclusive of bonus additions, the sum of £38,259,878 and £101,220 immediate and deferred annuities per annum ; the Office premiums thereon amounting to £840,241 per annum. The bases adopted for the valuation were as follows : — (a) Endowments : 3 per cent, interest without mortality. (b) Temporary Assurances : The proportion of the premiums corresponding to the unexpired risk. (c) All other classes of assurance : The 0 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 £517,992, as follows £ Total funds at 31st December, 1943 .. .. .. .. 12,664,713 Less value of liabilities .. .. .. .. .. 12,161,017 Net surplus .. .. .. .. .. 503,696 Interim bonus paid during year .. .. .. .. .. 14,296 Total surplus .. .. .. .. .. £517,992 I recommend that £19,279 of the net surplus be carried forward, and that £484,417 be divided amongst all participating policies in the form of a compound reversionary bonus on the sums assured and bonuses existing at the valuation date, at the following rates : — Policies issued under present premium tables- Per Cent - Whole-life assurances and endowment assurances maturing at ages £ s. d. eighty and over .. .. .. .. .. 3 10 0 Other endowment assurances .. .. .. .. ..300 Pure and double endowment assurances .. .. .. .. 2 10 0 Policies issued under closed premium tables .. .. .. ..300 The above rates apply in respect of policies on which three years' premiums have been paid during the triennium ended 31st December, 1943 ; proportionate rates apply in respect of policies on which less premiums have been paid during the same period. S. Beckingsale, F.1.A., Actuary. The Government Insurance Commissioner, Wellington.

Approximate Cost of Paper.—Preparation, not given ; printing (843 copies), £7.

By Authority: E. V. Paul, Government Printer, Wellington. —1944. Price &J.]

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