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REPORT BY THE ACTUARY RESPECTING THE VALUATION OF THE LIABILITIES UNDER LIFE POLICIES AND ANNUITIES OP THE NEW ZEALAND <&mmmmt geprtant, 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, 1905. 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 suoh 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 in the case of whole-life assurances, and allowance has been made for the actual incidence of the premium income. Reserves have been made for Children's Endowments without profits, Investments, and Deferred Annuities equivalent to the premiums paid accumulated at 4 per cent. Endowments, with profits, have been valued as sums certain payable at the end of their respective terms, and mortality has only been taken into con-