it.—l 9

9

It will be seen that the lives are not here classified in the way best calculated to bring out and show the effect of age on sickness and mortality. A rougher method of grouping has been resorted to for the sake of expedition. The results bring out clearly enough the increase in the liability to sickness which accompanies increasing age after the age of 30 has been passed, and they even show in a general way the increase in the rate of mortality. The more accurate method of grouping will of course be adopted in tho construction of the experience table above referred to. V.—VALUATIONS. Next to the marked improvement in rates of contribution, already referred to on page 3, and to be further treated of below, the most important events of the year in their bearing on friendly societies are the valuations made by Mr. George Leslie, one of the public valuers. The following societies have been valued by him. All are lodges of the Manchester Unity of Odd Fellows : — Situated at Loyal Charles Bruce Lodge, No. 5373 ... ... ... Grahamstown. „ Albert „ No. 5855 ... ... ... Kumara. „ Goldsborough ~ No. 5851 ... ... ... Goldsborough. „ Greymouth ~ No. 5560 ... ... ... Greymouth. „ Hokitika „ No. 5429 ... ... ... Hokitika. „ Ross „ No. 5477 ... ... ... Ross. ~ Waimea ~ No. 5515 ... ... ... Stafford. The first of these is a branch of the Auckland District, while the remainder constitute the Hokitika District, and are therefore interdependent in respect of their funeral liabilities. The result of the valuations was to show a surplus in the case of the first-named lodge, and a deficiency in the case of each of the others. The method of valuation by which the deficiencies were brought out is, in the opinion of the Actuary attached to this office, in no respect too severe; while the surplus disclosed in the case of the Loyal Charles Bruce Lodge is, in his opinion, a real one, though, for the reasons pointed out by Mr. Leslie, not properly divisible. An abstract of the valuations is presented in Schedule V. to this report. The rate of interest used was in each case 4 per cent., and the tables of expected sickness and mortality w 7ere those known as the " Manchester Unity Experience, 1866-70 ; Eural, Town, and City Districts combined." It will be noticed that in three out of the seven societies valued, the rate of interest actually realized during the preceding quinquennium was, on an average, less than 4 per cent, per annum; but still, as in all these cases, except perhaps that of the Loyal Goldsborough Lodge, a rate considerably in excess of 4 per cent, could, with prudent management, be looked for in the future, a 4-per-cent. valuation would give a truer view of the actual liability than a valuation based on a lower rate of interest. In the case of the Loyal Greymouth Lodge alone does the rate of interest rise greatly above 4 per cent. The assets of that lodge at the date of valuation may be classified as follows: — £ s. d. Borough Council debentures ... 668 10 0 bearing interest at the rate of 7 per cent. Fixed deposits in banks ...1,043 18 1 „ ~ ~ ~ 6-j ~ Deposits in Post Office Savings Bank 204 11 8 ~ ~ ~ „ 4| ~ Assets not bearing interest ... 156 8 9 Total ... ...2,073 8 6 At first sight, therefore, it might be supposed that this lodge ought to have been valued at a higher rate of interest than 4 per cent. ; but, seeing that no less than 73 of its members, out of a total of 114, are below the age of forty, it is evident that a very large proportion.of its heaviest liabilities (the payments to members permanently incapacitated for work) must be deferred a great number of years, and that therefore a rate of interest must be chosen which may be counted on confidently, not only during the immediate future, but for a period of at least half a century. Moreover, in a society consisting of so small a number of members as 114, the probability of large fluctuations in the experience of sickness and mortality renders it imperative that there shpuld be, in some shape or other, a heavy loading on the mathematical or pure premiums computed on ffhe assumption of an average experience. This loading or margin is partly provided by the profit arising from the withdrawal of members, as these latter are not, as in life offices, allowed any compensation for the loss which they sustain ; but a more certain and satisfactory margin is provided by the realization of a higher rate of interest than that assumed in the computation of the premiums and in the valuation of its assets and liabilities. As regards the tables of sickness and mortality, it is believed by tho Actuary attached to this office that they over-estimate both the rate of sickness and the rate of mortality likely to be experienced by the majority of New Zealand friendly societies at each age of life, except perhaps at the very advanced ages, at which such weight as the celebrated data of Mr. F. G. P. Neison can be considered to possess on this subject must be held rather to indicate that, unless a rigorous interpretation be placed on the rules relating to relief in chronic infirmity, the payments to very old members are likely to be heavier than the scanty though mutually corroborative data of the Manchester Unity have shown. The possibility that the claims for payment in old age may be at a higher rate than that indicated by the Manchester Unity Experience, when combined with the probability (founded on the investigation's of Mr. Meikle, F.1.A., already referred to on page 6 of this report) that the mortality experienced by New Zealand societies will be lower than that experienced by the Manehesty Unity iv England, and that therefore a larger proportion of members will survive to claim what is virtually a superannuation, goes far to show that it would be imprudent, in tlie majority of cases, to estimate the sickness liabilities of a society at a lower amount than that given by the Manchester Unity Experience. Even in regard to the funeral liabilities the presumption in favour of a low mortality is not sufficiently strong to justify a departure in the direction of leniency from the Odd Fellows' data. 2—H. 19.