ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1949

Appendix to the Journals of the House of Representatives, 1950 Session I, H-08

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1950 NEW ZEALAND

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1949

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

Government Insurance Office, Wellington, 13th March, 1950. I have the honour to submit the following report upon the transactions of the Department for the year ended 31st December, 1949, and its position at that date. The Eevenue Account, Balance-sheet, and Statement of Business are appended. New Business and Business in Force. —New business for the year amounted to 13,512 policies, assuring the sum of £8,578,568, the premiums thereon being £212,039 per annum. Thirty-six annuities were also granted, the purchase-money being £29,825. The total business in force at the end of the year (including immediate, deferred, and contingent annuities for £377,974 per annum) comprises 139,903 policies, bearing an annual premium income of £1,487,534-. The total sum assured is £63,519,885, to which reversionary bonuses amounting to £4,722,138 have been added. Income.—The total income amounted to £2,222,861, made up as follows : £ Premium income .. .. .. 1,582,514 Interest income (net) .. .. 610,522 Annuity-purchase money .. .. 29,825 The total for the year exceeded that for the previous year by £202,870. Outgoings.—During the year, 1,972 policies became claims by death of the life assured and by maturity, the payment involved being £773,967. An additional sum of £50,003 was paid to annuitants and a total of £113,556 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 £30,600,000. Accumulated Funds. —Assurance, annuity, and endowment funds, apart from special reserves of £505,000, now stand at £16,621,068, an increase of £959,071 on the previous year, a record addition in the history of the Department for any one year. Bonus Distribution. —The bonus investigation carried out by the Actuary discloses a net cash surplus of £276,828, including interim bonuses paid during the year, and this surplus enables bonuses to be allotted for 1949 to all participating policyholders at the same rates as for the previous eight years.

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Expense Ratios. —The ratio of expenses to (a) total income and (b) premium income for the last five years is as follows.: — Ratio of expenses to — 1945. 1946. 1947. 1948. 1949. [a) Total income .. .. 10-66 12-13 11-67 12-22 11-64 (b) Premium income .. ..16-37 17-77 16-42 17-13 16-04 The Department is pleased to be able to point to a substantial decrease in the expense ratios on this occasion, despite the fact that the level of ordinary working costs and expenses is still high. This improvement in the percentage cost of administration has to some degree been accounted for by the Department's ceaseless efforts to improve efficiency by the introduction of work-saving methods and by the practice of all business economies. Benefit is also being felt by reason of the increased income arising from the expansion of business in the last few years associated with a relative levelling off in the proportionate rate of new business increases. Investments. —The rate of interest earned by life-insurance offices has shown an almost uninterrupted decrease for the last twenty years, but signs are not now wanting that if this trend has not been reversed it has at least to some extent been arrested. The Department has encountered all the difficulties facing investors in placing investments at a remunerative rate in a restricted market saturated with idle money, but has, nevertheless, been able to keep all funds employed. General. —The Department has had another record year of business activity. The volume of new business written was over £500,000 greater than that written in 1948, which, up to that time, had constituted the record. This business was all written in New Zealand, and as it does not include any industrial insurance it can fairly be claimed that the Department is discharging its obligations to the insuring public of this country and fulfilling the purpose for which it was created over eighty years ago. This purpose may briefly be described by quoting the following extract from the sixth report of the Government Insurance Commissioner, dated the 31st July, 1875 : Generally a system has been constructed under which the State offers to every person an easy means of providing for his family and guarantees that provision while at the same time it relinquishes to him the profit, if any, of the transaction. The State "is satisfied with the recompense which it derives from the increase of provident habits and the decrease of destitution among its people and the insurer receives the more immediate advantage. The continued success of such a system is a social object of inestimable worth and should be carefully cherished. The whole community collectively and members of it individually are directly interested in that success and directly share in the gain. Thus this Department, constituted on the mutual principle and the first to set up a full life-insurance organization and service in New Zealand, has been fulfilling its duty to the public throughout its eighty years of existence in a remarkably successful way and at the same time as an ordinary taxpayer has contributed substantially to the revenues of the country. Land and income tax alone paid in the last forty years exceeds £1,000,000, and these charges for the year just completed amounted to no less a sum than £55,943. It is my privilege once again to extend my thanks to all members of the Department's staff, both office and field, for their loyal service throughout the year. The senior office staff have been carrying a heavy burden owing to the expansion of business and continued staff shortages, and to them the Department is particularly indebted for the success attained during the year. 11. L. Ryan, Commissioner.

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Revenue Account of the Government Life Insurance Department for the Year Ended 31st December, 1949 £ Amount of funds at Ist January, 1949 .. .. .. 15,661,997 Death claims under assurance policies, including bonus £ Renewal premiums: Assurance, annuity, and endowment, additions .. .. .. .. .. .. 263, 984 less reinsurance premiums . . .. . . .. 1,266, 350 Endowment assurances matured, including bonus additions . 499, 245 New premiums (including instalments of first year's premiums Endowments matured .. .. .. 10,026 falling due in the year), less reinsurance premiums .. 197,890 Premiums returned on endowments .. .. .. 712 Single premiums : Assurance and endowment .. .. 118,274 Bonuses surrendered for cash .. .. .. 5,831 Consideration for annuities .. .. .. .. 29,825 Annuities . . . . .. . . . . . . 50,003 £ Surrenders . . . . .. . . . . . . 80,556 Interest, rent, and other income .. .. 623,434 Loans released by surrender .. .. .. .. 27,169 Less property expenses and war-damage- Commission— £ insurance premiums .. .. .. 12,912 New .. .. .. .. .. 126,697 610,522 Renewal .. .. .. .. .. 12,330 139,027 Expenses of management .. .. .. .. 114,371 Contribution to Public Service Superannuation Fund .. 3,514 Agents'retiring-allowances .. .. .. ... 1,779 Land and income tax .. .. .. .. 55,943 Property depreciation .. .. .. . . 7,036 Transfer to investment reserve . . . . . . 4,594 Amount of funds at 31st December, 1949 . . . . 16,621,068 £17,884,858 £17,884,858

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

Statement of Business For the Year 1949

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Year 1949. | Number. | Sum Assured. "CT Annual Premiums. Annuities. Ordinary. Extra. j Immediate. Deferred. Policies in force at 31st December, 1948 New business Bonus allotted Total Policies discontinued during 1949 Total policies in force at 31st December, 1949 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 1949 Progress of Business of the Total issued Total void Total in force Polici 130,971 13,548 es Issued an £ 57,218,623 8,578,568 d Discontinued I) £ s. d. 4,549,261 1 0 406,649 6 0 uring the Year . £ s. d. 1,328,180 3 5 211.397 17 0 1949 £ s. d. 3,072 6 9 640 13 1 £ s. d. 48,486 1 6 2,542 13 10 £ s. d. 227,322 11 0 128,066 2 0 144,519 4,616 65,797,191 2,277,306 4,955,910 7 0 233,772 10 0 1,539,578 0 5 55,597 16 5 3,712 19 10 158 17 0 51,028 15 4 -969 5 2 355,388 13 0 29,412 4 0 139,903 63,519,885 4,722,137 17 0 1,483,980 4 0 3,554 2 10 51,998 0 6 325,976 9 0 Particu 606 1,366 1,121 102 265 950 206 lars of Polic £ 223,609 380,601 688,788 55,244 140,339 465,620 323,105 ies Discontinued 1 £ s. d. 59,926 6 0 125,256 18 0 34,357 12 0 3,104 18 0 355 8 0 10,771 8 0 During the Year £ s. d. 6,641 4 7 14,362 0 9 17,717 19 5 1,578 2 3 3,601 4 0 11,360 11 8 336 13 9 1949 £ s. d. 42 7 4 20 13 4 32 2 9 3 2 4 59 9 7 1 1 8 £ s. d. 613 10 10 — 1,582 16 0 £ s. d. 976 10 0 72 0 0 23,278 5 0 2,288 4 0 2,797 5 0 4,616 2,277,306 233,772 10 0 55,597 16 5 158 17 0 -969 5 2 29,412 4 0 Governmei 352,710 212,807 %t Life Insv 1 £ 126,062,441 62,542,556 irance Department £ s. d. 12,360,278 5 0 7,638,140 8 0 Since Date of £ s. d. 3,322,255 15 9 1,838,275 11 9 Establishment £ s. d. 44,235 15 10 40,681 13 0 to 31st December, 1949 £ s. d. 583,171 8 0 205,196 18 6 139,903 63,519,885 j 4,722,137 17 0 1,483,980 4 0 3,554 2 10 377,974 9 6 1

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ACTUARY'S REPORT ON THE VALUATION OP THE GOVERNMENT INSURANCE DEPARTMENT AS AT 31st DECEMBER, 1949

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

Wellington, 31st March, 1950. In accordance with your instructions, a valuation of the Department's liabilities under its policies has been made as at 31st December, 1949, 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 139,903 policies assuring, inclusive of bonus additions, the sum of £68,242,023 and £377,974 immediate and deferred annuities per annum ; the office premiums thereon amounting to £1,487,534 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 (b) 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 £287,672, as follows : £ Total funds at 31st December, 1949 . . .. .. 16,621,068 Less value of liabilities .. .. .. 16,338,741 Net surplus .. .. .. .. 282,327 Interim bonus paid during year .. .. .. 5,345 £287,672

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I recommend that £271,483 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., £10,844 — 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 (1,149 copies), £l4.

By Authority: E. E. Owen, Government Printer, Wellington.—l9so.

Price 6d.]

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