H.—Ba.

REPORT BY THE ACTUARY RESPECTING THE VALUATION OE THE LIABILITIES TJNDEE LIFE POLICIES AND ANNUITIES OF THE NEW ZEALAND dMOTmettt JttMratta J^prtment, ■-•■-'• In terms of Section 42 of " The Government Insurance and Annuities Act., 1874." (See Fourth Schedule.)

I. The date up to which the valuation was made was the 31st December, 1899. 11. The principles upon which the valuation and distribution of profits were made were as ' follows :— (1.) Principles of Valuation. —The valuation has been made upon a strictly "net premium" basis ;in other words, no credit whatever has been taken for any extra premiums or loadings, the net premiums alone having been valued for inclusion among the assets. The liability has been ascertained by taking the difference between the present value of the sums assured (including reversionary bonuses) and the present value of the net premiums (derived from the Institute of Actuaries H M Table with 3i per cent, interest). Where the original premiums have been reduced by the application of amounts received in consideration of the surrender of bonuses or former policies the present values of such reductions have been added to the liability. In all cases where an extra premium was payable the policy has been valued at the true age, and a full proportion has been reserved for the unexpired risk for which the extra premium had been paid. Adequate extra reserves have been made for limited-premium policies and the immediate payment of claims, and allowance has been made for the actual incidence of the premium income. Reserves have been made for Children's Endowments, Investments, and Deferred Annuities equivalent to the premiums paid accumulated at 4 per cent. Annuities have been valued by the English Government Annuitants Mortality Experience (1884), with 3i per cent, interest, and a further reserve has been made for annuities granted since 20th May, 1896,

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