ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1946

Appendix to the Journals of the House of Representatives, 1947 Session I, H-08

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1947 NEW ZEALAND

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1946

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

Government Insurance Office, Wellington, 26th May, 1947. I have tlie honour to submit the following report upon the transactions of the Department for the year ended 31st December, 1946, 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 11,188 policies, assuring the sum of £6,511,227, the premiums thereon being £144,377 per annum. Twenty-nine annuities were also granted, the purchase-money being £37,776. The total business in force at the end of the year (including immediate, deferred, and contingent annuities for £153,635 per annum) comprises 114,224 policies, bearing an annual premium income of £1,064,026. The total sum assured is £45,687,107, to which reversionary bonuses amounting to £4,235,874 have been added. Income. —The total income amounted to £1,705,862, made up as follows : premium income, £1,126,456; interest income (net), £541,630; annuity-purchase money £37,776. The total for the year exceeded that for the previous year by £144,192. Outgoings.—During the year 1,912 policies became claims by the death of the policyholders and by maturity, the payment involved being £724,286. The total amount paid in claims since the inception of the Department amounts to £22,132,089. Accumulated Funds. —Assurance, annuity, and endowment funds, apart from special reserves of £524,691, now stand at £14,110,517, an increase of £602,114 over the previous year. Bonus Distribution. —The bonus investigation carried out by the Actuary discloses a net cash surplus of £220,149, excluding interim bonuses paid during the year, and this surplus is sufficient to enable bonuses to be allotted for 1946 to all participating policyholders at the same rates as for the previous five years.

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Owing to conditions arising out of the war and its aftermath, bonus notices were not sent to policyholders in respect of the bonus declarations for the years 1944 and 1945, but with some improvement in the staff situation it has been possible to arrange to distribute notices on this occasion. Expense Ratios. —The ratio of expenses to (a) total income and (b) premium income for 1944,1945, and 1946 is as follows : Ratio of Expenses to 1944. 1945. 1946. (a) Total income .. .. .. B*9o 10*66 12-13 (b) Premium income .. .. 14*06 16*37 17*77 The increases in the percentages are principally due to the very substantial increases in the volume of new business, also to the increased expenditure for salaries and office requirements. Investments. —The falling trend in interest rates and the difficulty in securing suitable outlets for the investment of the policyholders' funds has caused some anxiety, but the problems in this respect are no greater than those in general facing all lifeinsurance institutions, which act as reservoirs for the savings of the thrifty and provident. It must be mentioned, however, that if interest rates remain low all holders of lifeinsurance contracts must resign themselves to receiving less favourable bonus returns than have accrued in the past. General. —The results for the past year have been particularly satisfactory, as the new business record created in 1945 has been substantially exceeded, the total of £6,511,227 for the year registering an increase of £1,587,418 over the figures written in 1945. It is desired to acknowledge the fine contribution made to this achievement by the field and agency staff, and the Department is gratified to know that its efforts to extend its sphere of operations are meeting with continued success. There has been a corresponding increase in the volume of business written under group and staff superannuation schemes, and it is evident that the Department's reputation for prompt and efficient service has enabled it to compete with an increasing degree of success in this field of business. In conclusion, it is desired to place on record a tribute to the loyalty and cooperation of the Department's staff, and also to make reference to the recent retirement of Mr. J. W. Macdonald from the position of Commissioner, an office which he filled with distinction. Mr. Macdonald spent his career with the Department, to which he gave over forty-four years of sterling service, whilst during this period the Department has attained a position of some eminence in the life-insurance world. H. L. Ryan, Commissioner.

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Revenue Account of the Government Life Insurance Department for the Year ended 31st December, 1946 £ £ Amount of funds at Ist January, 1946 .. .. .. 13,508,403 Death claims under assurance policies, including bonus Renewal premiums: Assurance, annuity and endowment, less additions .. .. .. .. .. .. 280,857 reinsurance premiums .. .. .. .. 921,850 Endowment assurances matured, including bonus additions 430,641 New premiums (including instalments of first year's premiums Endowments matured . . .. .. .. .. 11,850 falling due in the year), less reinsurance premiums .. 129,005 Premiums returned on endowments .. .. .. 938 Single premiums: Assurance and endowment .. .. 75,601 Bonuses surrendered for cash .. .. .. .. 1,305 Consideration for annuities .. .. .. .. 37,776 Annuities .. .. .. .. .. .. £ Surrenders .. .. .. .. .. .. 47,037 Interest, rent, and other income .. .. 549, 628 Loans released by surrender . . .. .. .. 27,287 Less property expenses .. .. .. 7,998 Commission— £ 541,630 New .. .. .. .. .. 92,574 Renewal .. .. .. .. .. 8,510 101,084 Contribution to Public Service Superannuation Fund .. 751 Land and income tax . . .. .. .. .. 52,406 Agents'retiring-allowances .. .. .. .. 2,457 Expenses of management .. .. .. .. 101,787 War-damage-insurance premiums .. .. .. 789 Property depreciation .. .. .. .. .. 6,701 Amount of funds at 31st December, 1946 .. .. 14,110,517 £15,214,265 £15,214,265

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Balance-sheet of the Government Life insurance Department on 31st December, 1946 Liabilities £ Assets £ Total assurance, annuity, and endowment funds (as per Loans on policies .. .. .. .. .. 770,555 Revenue Account) .. .. .. .. .. 14,110,517 New Zealand Government securities .. .. . 5,934,244 Claims admitted, proofs not yet completed .. .. 104,241 Loans to local bodies .. .. .. .. .. 2,838,342 Annuities . . .. .. .. .. .. 230 Landed and house property . . .. .. .. 495, 386 Medical fees .. .. .. .. .. .. 1,583 Mortgages on property .. .. .. .. 4,212,114 Premium and other deposits .. .. .. ..52,914 £ Sundry creditors .. .. .. .. .. 13,390 Overdue premiums on policies in force .. .. 2,907 Accident and Fidelity Fund .. .. .. .. 5,000 Outstanding premiums due but not overdue .. 100, 807 Investment Reserve Account .. .. .. .. 519,691 103,714 £ Overdue interest .. .. .. .. 1,757 Sinking funds on local-body loans .. .. 3,435 Outstanding interest due but not overdue .. 8,830 Interest accrued thereon .. .. .. 42 Interest accrued but not due .. .. .. 135,844 3,477 —— 146,431 Sundry debtors .. .. .. .. .. 4,729 Office furniture and fittings .. .. .. .. 920 Cash in hand and on current account .. .. .. 304,608 £14,811,043 £14,811,043 H. L. Ryan, Commissioner. W. K. Watson, Secretary. Government Life Insurance Department, 28th April, 1947. The Audit Office, having examine the Revenue Account and Balance-sheet and compared them with the relative books, documents, and securities, hereby certifies them to be in accordance therewith.— J. P. Rutherford, Controller and Auditor- General.

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H. L. Ryan, Commissioner. S. Beckingsale, F.1.A., Actuary.

Statement of Business for the Year 1946

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Number. Sum assured. Reversionary Bonuses. Annual Premiums. Annuities. Year 1946. Ordinary. Extra. Immediate. Deferred. Policies issued and discontinued during the Year 1946 £ £ £ s. d. £ s. Policies in force at 31st December, 1945 .. 107,023 40,837,857 4,126,420 958,820 7 9 2,168 4 New business .. .. .. .. 11,217 6,511,227 .. 144,036 5 0 340 18 Bonus allotted .. .. .. .. .. 318,434 d. 2 5 £ s. d. 35,148 14 4 5,894 11 8 £ s. d. 81,458 5 6 37,298 9 8 Total Policies discontinued during 1946 118,240 4,016 47,349,084 1,661,977 4,444,854 208,980 1,102,856 12 9 41,076 16 8 2,509 2 262 13 7 5 41,043 6 0 1,982 0 10 118,756 15 2 4,183 1 0 Total policies in force at 31st December, 1946 114,224 45,687,107 4,235,874 1,061,779 16 1 2,246 9 2 39,061 5 2 114,573 14 2 Pc How discontinued — By death By maturity By surrender By change to other tables By cancellation By lapse By expiry irticulars of 670 1,242 997 121 118 738 130 Policies discontinued during the Year 1946 £ £ £ s. d. £ s. 223,375 68,333 6,729 17 7 34 6 336,509 104,098 12,917 6 3 17 7 451,921 21,745 11,284 8 2 15 18 58,323 3,663 1,327 5 9 51,332 108 1,162 2 5 4 15 328,355 11,033 7,467 18 10 189 18 212,162 .. 187 17 8 0 8 d. 3 9 1 0 4 0 £ s. d. 1,867 8 6 11412 4 £ s. d. 20 0 0 3,268 18 0 454 13 0 439 10 0 Total discontinued during year .. 4,016 1,661,977 208,980 41,076 16 8 262 13 5 1,982 0 10 4,183 1 0 Progress of Business of the Gove Total issued Total void rnment Life 314,382 200,158 Insurance Department « £ £ 102,353,787 11,239,948 56,666,680 7,004,074 rince Date of £ s. d. 2,755,269 1 11 1,693,489 5 10 Establishment to 31st December, 1946 £ s. d. £ s. d. 42,547 1 3 300,248 2 6 40,300 12 1 146,613 3 2 Total in force 114,224 45,687,107 4,235,874 1,061,779 16 1 2,246 9 2 153,634 19 4

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ACTUARY'S REPORT ON THE VALUATION OF THE GOVERNMENT INSURANCE DEPARTMENT AS AT 31st DECEMBER, 1946

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

Wellington, 16th May, 1947. In accordance with your instructions, a valuation of the Department's liabilities under its policies has been made as at 31st December, 1946, 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 114,224 policies assuring, inclusive of bonus additions, the sum of £49,922,981 and £153,635 immediate and deferred annuities per annum ; the office premiums thereon amounting to £1,064,026 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. The valuation disclosed a total surplus of £224,879, as follows : £ Total funds at 31st December, 1946 .. .. .. 14,110,517 Less value of liabilities .. .. .. 13,890,368 Net surplus .. .. .. .. 220,149 Interim bonus paid during year .. .. .. 4,730 £224,879

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I recommend that £204,442 of the above net surplus 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 undermentioned rates for each full year's premium paid during the year, and that the balance of the net surplus —viz., £15,707 —be carried forward : Policies issued under present premium tables — Per Cent. Whole-life assurances and endowment assurances £ s. d. maturing at ages eighty and over .. ..140 Other endowment assurances .. .. ..100 Pure and double endowment assurances .. .. 0 17 0 Policies issued under closed premium tables .. ..100 S. Beckingsale, F.1.A., Actuary. The Government Insurance Commissioner, Wellington.

Approximate Cost of Paper.—Preparation, not given ; printing (903 copies), £l3.

By Authority: E. V. Paul, Government Printer, Wellington.—l 947.

Price Qd.]

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