11. -8.

legislation just referred to should be reflected in a lower ratio of net interest earnings as compared with previous years. There can be no doubt, however, that the best interests of the policyholders have been conserved by tin- Department making provision for the contingency that some interest may not be paid. Reductions in salaries and wages and lower incomes generally have diminished the sources from which insurance premiums are paid, and the normal market for new business has been correspondingly restricted. As might be expected in such circumstances. Ihe new business during the past year has suffered, and surrenders and lapses were more numerous than usual. Notwithstanding these adverse features, the total Assurance Fund and Investment Fluctuation Reserve and Accident Fidelity Reserve increased by nearly a quarter of a million pounds. As regards the future, while the surplus earnings of all life-assurance offices have been affected by the unusual economic conditions, and while meanwhile it is essential to follow a conservative course, it is safe to say that the Department has more than held its own in these times of adversity and that, when normal conditions do return, policyholders need have no misgivings as to the value and soundness of their insurance contracts. A new form of policy was issued during the year, making provision for the immediate liquidation of any balances of mortgage in favour of building societies in the event of the death of the borrower. This Department's form of contract lias been adopted by practically all the leading building societies, and the amount of business already transacted gives every indication that the plan will become increasingly popular. In conclusion, I should like once again to pay a tribute to the good work done by all members of the staff (both office and field) in these difficult times. It is due to their efficiency, energy, and loyalty that the Department holds such a high position in the extremely competitive field of life insurance. A. E. Allison, Commissioner.

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