ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1948

Appendix to the Journals of the House of Representatives, 1949 Session I, H-08

IT—B

1949 NEW ZEALAND

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1948

Presented to Both Houses of the General Assembly Pursuant to the Provisions of the Government Life Insurance Act, 190S

Government Insurance Office, Wellington, Ist April, 1949. I have the honour to submit the following report upon the transactions of the Department for the year ended 31st December, 1948, and its position at that date. The Revenue Account, Balance-sheet, and Statement of Business are appended. New Business and Business in Force.—New business for the year amounted to 13,204 policies, assuring the sum of £8,077,867, the premiums thereon being £185,467 per annum. Thirty-three annuities were also granted, the purchase-money being £37,459. The total business in force at the end of the year (including immediate, deferred, and contingent annuities for £275,809 per annum) comprises 130,971 policies, bearing an annual premium income of £1,331,253. The total sum assured is £57,218,623, to which reversionary bonuses amounting to £4,549,261 have been added. Income.—The total income amounted to £2,019,991, made up as follows : £ Premium income .. .. .. .. 1,403,312 Interest income (net) .. . . .. 579,220 Annuity-purchase money .. .. .. 37,459 The total for the year exceeded that for the previous year by £90,210. Outgoings.—During the year, 1,931 policies became claims either by death of the life assured or by maturity, the payment involved being £731,312. In addition, a sum of £46,794 was paid to annuitants and an amount of £86,952 to holders of policies who cashed bonuses or surrendered their contracts. The total amount returned to policyholders or their representatives since the inception of the Department is now in excess of £29,600,000. Accumulated Funds. —Assurance, annuity, and endowment funds, apart from special reserves of £505,000, now stand at £15,661,997, an increase of £826,434 on the previous year.

TT —8

Bonus Distribution.- —The bonus investigation carried out by the Actuary discloses a net cash surplus of £271,061, including interim bonuses paid during the year, and this surplus enables bonuses to be allotted for 1948 to all participating policyholders at the same rates as for the previous seven years. Expense Ratios—The ratio of expenses to (a) total income and (b) premium income for 1946, 1947, and 1948 is as follows • Ratio of expenses to— 1946. 1947. 1948. (a) Total income .. .. .. 12-13 11-67 12-22 (b) Premium income .. .. .. 17-77. 16-42 17-13 Expense ratios show slight increases over all as compared with 1947, but these were mainly attributable to the strain imposed by writing a greatly increased volume of new business. The ratios covering management expenses included in the over-all figures showed a slight decrease, despite the high level of everyday costs due to prevailing conditions. Investments. —The major problem faced by life offices to-day is the continued fall in interest yields on the funds, and this gradual decline has not yet been arrested, though the Department in this respect suffers no greater disabilities than its competitors. The funds are closely invested, and during the year the Department has succeeded in placing a greater proportion of new investments in loans on mortgage of freehold property, yielding a more adequate interest return. General. —The Department has enjoyed another very satisfactory trading year, new business having again reached a record level, being over £1,000,000 in excess of the record amount written in 1947. The increase in funds of £826,434 is the largest increase registered in any one year and income for the first time has exceeded the £2,000,000 mark. This business is all confined to New Zealand and does not include any industrial insurance, as this type of business is not transacted by the Department, being considered unsuited to the economic needs of the people of this country. There is an accumulation of evidence that the Department's contracts are meeting with full acceptance with all classes in the community, and further progress has been made in the establishment of group and staff superannuation schemes, which contribute a satisfactory quota towards new-business figures. The life-insurance service rendered by the Department to the public of New Zealand is second to none, and appreciation is due to all members of the Office and field staff for the excellent work performed throughout the year in maintaining this high standard. The Department enters on its eightieth year of business with undiminished confidence in its ability to meet any eventuality. H. L. Ryan, Commissioner.

2

H—B

Revenue Account of the Government Life Insurance Department for the Year Ended 31st December, 1948 £ | £ Amount of funds at Ist January, 1948 .. .. 14,835,563 j Death claims under assurance policies, including bonus Renewal premiums: Assurance, annuity, and endowment, additions .. .. .. .. .. .. 275, 136 less reinsurance premiums .. .. .. .. 1,135,110 \ Endowment assurances matured, including bonus additions .. 447,414 New premiums (including instalments of first year's premiums Endowments matured .. .. . . .. 7,583 falHng due in the year), less reinsurance premiums .. 170,161 Premiums returned on endowments .. .. .. 1,179 Single premiums: Assurance and endowment .. .. 98,041 Bonuses surrendered for cash .. .. .. .. 2,802 Consideration for annuities .. .. .. .. 37,459 Annuities .. .. .. .. .. .. 46,794 £ Surrenders .. .. .. .. .. .. 55,209 Interest, rent, and other income .. .. 590,047 Loans released by surrender .. » .... . . 28,941 Less property expenses and war-damage-insurance Commission— £ premiums .. .. .. .. 10,827 New .. .. .. .. .. 119,512 — 579,220 Renewal .. .. .. .. 10,682 - 130,194 Expenses of management .. .. .. .. 111,902 Contributions to Public Service Superannuation Fund .. 2,775 Agents' retiring-allowances .. . . . . .. 1,891 Land and income tax .. .. .. .. 50,115 Property depreciation .. .. .. .. .. 8,929 Provision for income-tax .. .. .. .. 10,000 Transfer to investment reserve .. .. . . 12,693 Amount of funds at 31st .December, 1948 .. .. 15,661,997 £16,855,554 £16,855,554

3

H—B

Balance-sheet or the Government Life Insurance Department on 31st December, 1948 Liabilities ; Asset* £ Total assurance, annuity, and endowment funds {as per £ I Loans on policies .. .. .. .. .. 761,193 Revenue Account) .. .. .. .. .. 15,661,997 ! New Zealand Government securities .. .. .. 7,645,815 Claims admitted, proofs not yet completed .. 89,934 j Loans to local bodies .. .. .. .. .. 2,704,026 Annuities .. .. .. .. .. .. 362 j Landed and house property .. .. .. .. 490,610 Medical fees . . .. .. .. .. .. 279 j Mortgages on property . . .. .. .. 4,322,578 Premium and otlier deposits ........ 43,739 £ Sundry creditors .. .. .. .. .. 11,331 Overdue premiums on policies in force .. .. 4,352 Accident and Fidelity Fund .. .. .. .. 5,000 Outstanding premiums due but not overdue .. 82,531 Provision for income-tax .. .. .. .. 100,000 86,883 Investment Reserve Account* .. .. .. .. 400,000 Overdue interest .. .. .. .. 516 £ Outstanding interest due but not overdue . . 5,465 Sinking funds on local-body loans .. .. 3,994 Interest accrued but not due .. .. .. 151,215 Interest accrued thereon .. .. .. 50 157,196 4,044 Sundry debtors .. .. .. .. .. 7,946 Income-tax paid in advance .. .. .. .. 50,000 Cash in hand and on current account .. .. ~ 90,439 £16,316,686 j £16,316,686 ■ ■ ■' I r— l * Decreased owing to adjustment of value of investments held in London consequent on exchange reverting to parity with sterling— book value of these investments written up in 1945 to equivalent of New Zealand currency. H. L. Ryan, Commissioner. W. K. Watson, Secretary. Government Life Insurance Department, 9th March, 1949. 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.— J. P. Rutherford, Controller and Auditor-General.

4

H—B

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

Statement of Business For the Year 1948

5

1 Year 1948. j Number. 1 Sum assured. Reversionary j Bonuses. ! Annual Premiums. Annuities. Ordinary. | Extra. Immediate. j Deferred. Policies in force at 31st December, 1947 New business Bonus allotted Total Policies discontinued during 1948 Total policies in force at 31st December, 1948 How Discontinued — By death By maturity By surrender By change to other tables By cancellation By lapse and alteration By expiry .. .. Total discontinued during year .. Progress of Business of the Total issued Total void Total in force Policie £ 121,737 13,237 s Issued and Discontinued Ik £ | £ s. d. I 50,999,042 i 4,383,315 18 0 8,077,867 ! 371,600 8 0 iring the Year, 1948 £ s. d. | £ s. d. | 1,188,272 2 5 1 2,662 17 3 ; 184,925 14 10 541 2 6 i £ s. d.l 45,366 18 4 j 2,847 8 0 £ s. d. 187,397 6 8 56,752 5 8 134,974 4,003 59,076,909 1,858,286 4,754,916 6 0 205,655 5 0 1,373,197 17 3 ! 45,017 13 10 | 3,203 19 9 131 13 0 48,214 6 4 - 271 15 2 244,149 12 4 16,827 1 4 130,971 57,218,623 4,549,261 1 0 1,328,180 3 5 3,072 6 9 48,486 1 6 227,322 11 0 Particu 641 I 1,290 990 ; 101 214 584 183 lars of Polic £ 233,597 341,675 550,823 46,628 109,655 289,240 286,668 ies Discontinued 1 £ s. d. 58,698 18 0 110,166 18 0 25,478 18 0 3,625 4 0 185 9 0 7,499 18 0 During the Year £ s. d. ; 7,160 8 10 i 12,296 0 10 j 14,467 4 5 1 873 10 5 1 2,671 7 3 7,150 1 2 399 0 11 1948 £ s. d. 21 3 3 19 6 9 33 17 8 12 1 0 45 4 4 £ . s. d. 1,802 16 2 -2,074 11 4 £ s. d. 592 10 0 12,960 19 0 10 0 3,101 2 4 4,003 1,858,286 205,655 5 0 45,017 13 10 131 13 0 - 271 15 2 16,827 1 4 Governmet 339,162 208,191 it Life I-nsit £ 117,483,873 60,265,250 irance Department £ s. d. 11,953,628 19 0 7,404,367 18 0 Since Date of Establishment £ s. d. 1 £ s. d. 3,110,857 18 0 43,505 2 0 1,782,677 15 4 40,522 16 0 to 31st Decet £ 452,56 176,75 nber, 1948 s. d. a 12 2 .3 19 8 130,971 | 57,218,623 4,549,261 1 0 1,328,180 3 5 3,072 6 9 275,808 12 6

H—B

ACTUARY'S REPORT ON THE VALUATION OF THE GOVERNMENT INSURANCE DEPARTMENT AS AT 31st DECEMBEK, 1948

Presented to Both Houses of the General Assembly Pursuant to Section 40 of the Government Life Insurance Act, 1908

Wellington, sth April, 1949. In accordance with your instructions, a valuation of the Department's liabilities under its policies has been made as at 31st December, 1948, 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 130,971 policies assuring, inclusive of bonus additions, the sum of £61,767,884 and £275,809 immediate and deferred annuities per annum ; the office premiums thereon amounting to £1,331,253 per annum. The bases adopted for the valuation were as follows : (a) Endowments : 2£ per cent, interest without mortality. <(b) All other classes of assurance : The A 1924 29 ultimate table of mortality with 2| per cent, interest. (c) Annuities : The a (m) and a (/) ultimate tables of mortality with 3 per cent, interest. The net premium method of valuation was employed in respect of groups (a) and (6) 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 £271,061, as follows : £ Total funds at 31st December, 1948 „ . .. 15,661,997 Less value of liabilities .. .. .. 15,395,928 Net surplus .. .. .. .. 266,069 Interim bonus paid during year .. .. .. 4,992 £271,061

6

H—B

I recommend that £250,427 of the above net surplus be divided amongst all participating policies in the form of 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., £15,642 — be carried forward : Policies issued under present premium tables — p er c en t. 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 (1,143 copies), £ll.

By Authority: J. E. Wilson, Acting Government Printer, Wellington.—l 949. Vrice 6(1.]

7