AUSTRALIAN MUTUAL PROVIDENT SOCIETY

Press, Volume LXXXII, Issue 24897, 10 June 1946, Page 6

AUSTRALIAN MUTUAL PROVIDENT SOCIETY

CHAIRMAN’S SPEECH AT NINETY-SEVENTH ANNUAL MEETING RECORD NEW BUSINESS At the Annual Meeting of the A.M.P. Society at Sydney on June 7, 1946, tne •chairman said:— . “As this is the first annual meeting of the Society that has been held since the victorious conclusion of the Second World War., I wish to take the opportunity, before reviewing the results of the past year, briefly to outline the effect that conditions during that period have had upon the Society’s Business. We are proud of the manner in which this Society was able to assist the national war mainly in Australia and New Z®® lB ®?- We. can also be thankful that despite the strain borne by the Society’s organisation .during the last six years, it the future with every prospect of extending still further the valuable service it provides. Government Loans “From the outbreak of war. to the present time, the Society subscribed £64 million to Government loans. This sum is over £2O million in excess of the increase in the Society’s assets during that period’ and is evidence of the fulfilment of tne Society’s undertaking to assist the Governments to the utmost in the matter oi raising war finance. It mrfy be mentioneo thot the Society's Undertaking was a voluntary'onb given early in the war. In later years'when the Governments placed strict controls on all financial tions, and an embargo on any that did not directly assist tfie War effort, the Government loans have been virtually the only avenues of investment available for the Society's funds. It is to be hoP®“ that these controls will soon be modified so that industrial, commercial, and pastoral undertakings will once again find conditions -favourable for the development of their businesses. By investing a proportion of its funds directly in loans to such undertakings, the Society will play a useful part in assisting in the reconversion of the national economy to a prosperous peace-time basis.

War Claims “The Society has paid claims totalling £4,700,000 to the representatives of policyholders, whose deaths were due to war service. Included in this amount is the sum of £1,700,000 representing payments in respect of pre-war members who died as a result of aviation. At the outbreak of war the Board voluntarily decided that all policies then in force should be free of restrictions as to war service, and this latter amount represents the extra payments made in accordance with that decision.

Interest Rates “Due to the fact that practically all funds available for investment in the last six years have been subscribed to Government loans' bearing interest at 3i per cent per annum or less, there has been a steady decline in the rate of Interest realised by the Society on its mean funds. The rate realised in 1938 was £4 7s 7d per centum, and in 1945 the rate had fallen to £3 18s 9d. After deduction of all taxes the corresponding net rates were £4 Is 9d and £3 Ils 7d respeCti“lty‘is hoped that in future the Society will be able to secure a more varied portfolio of securities than has recently been the case. "There is a very definite danger tnat the trend to lower levels of returns on savings will have the effect of making thrift unattractive; that is, there may be a lessening of the urge for people to forgo the immediate use of part of their income as the return may appear to be little worth the sacrifice of current needs

and pleasures. . _ , “Thrift, enterprise, and the quality of independence which has characterised its people, have brought this country to its present stage of development. Progress in the future will depend no less upon these same essential qualities. Life assurance takes a leading part in stimulating these sound personal traits, and in encouraging the self-reliant majority to make provision for their later needs. “Besides making substantial additions to its investment and contingencies reserves, and writing down its office premises conservatively, the Society during the war set up a special reserve of £6,000,000 in the ordinary department, and at the end of 1944 had a special reserve of almost £1,000,000 in the

industrial department. "These reserves were necessarily set up to meet contingencies inseparable from the war, such as added mortality and changes from pre-war economic conditions, the extent of which were unpredictable. As previously mentioned the claims arising from the vzar to date fall little short of £5.000,000, and though the Society has been able to meet the strain of its added war deaths by reducing the bonus rate in the years in which they occurred, other contingencies arising from changed conditions, necessitate the retention and utilisation of these reserves. .1 refer to the general lowering of mterest rates, and the restriction in ana control of many avenues of investment. Valuation Basis "The Board have decided that the bases, of valuation of policy liabilities shall be strengthened, by altering the anticipated future net interest fate from 3 per cent, to 2 1 /a per cent. . “The change with regard to the industrial department has been made during the year, 1945, and results in the absorption of about £BOO,OOO of the special reserves of that department. As regards the ordinary department, the work connected with the change of valuation basis has been put in hand, but shortage of. staff, resulting from many officers stiH being on national service, has prevented its completion. The special reserves maintained in the ordinary department are fully adequate to meet tne increased liability expected to arise from the change. New Business “The new business for 1945 comprised policies totalling more than £38,700,000 sum assured. This figure was £6,000,000 in excess of the previous record established in 1944.

“This phenomenal increase in new business is undoubtedly a reflection of current economic conditions, under which the volume of money in the public’s hands greatly exceeds that required for the purchase of available goods. However, it is gratifying to see that such large numbers of the public realise the value of life insurance, and have placed their contracts with the Society. Undoubtedly the investment of surplus funds in long-term life insurance contracts has a stabilising influence which in present circumstances is beneficial to the community as a whole as well as to the individuals concerned. “A large part of the society’s new business continues to come from business institutions which are making provision through the society for the superannuation of their employees. The increasing desire of employers to make provision, on a contributory basis, for employees after retirement, and for their dependents after death, is a most progressive development in recent years. The society has specialised in this type of business, and the services and expert advice of its officers are readily available to any employer whd is interested in instituting such a scheme.

Economy of Management "The economy with which the society’s affairs are administered is evidenced by the fact that its expense rates continue to be the. lowest among the life offices transacting business in Australia and New Zealand. The expenses of management (including commission but excluding taxes) amounted to 10.42 per cent, of the premium receipts in the ordinary department during 1945, a rate which, notwithstanding the much greater amount of new business written, only slightly exceeded the rate of 10.31 per cent, for 1944. The corresponding figures for the Industrial Department were 23.32 per cent, in 1945 and 23.96 per cent, in 1944.

Bonuses to Policyholders “Notwithstanding the considerable sum paid during the year for war claims, and the measures taken to provide for future contingencies, the actuary’s report reveals »««A visible cash surplus of over £3,000.000 in the ordinary department. This sum will provide reversionary bonuses totalling over £5,000,000, the amounts allotted to individual policies being on a scale approximately 15 per cent- in excess of that used for 1944 Despite difficulties arising from the absence of numbers of the society’s staff on war service leave, it is expected that bonus certificates will be sent out to all participating policyholders on the 30th June in accordance with the pre-war cus-

In the industrial department the rate of bonus has been maintained at the same rate as for 1944, and the divisible cash surplus amounts to £377,867 providing reversionary bonuses of about £485.000

Life Insurance Legislation - The year 1945 saw the passage by the Commonwealth Parliament of the loncpromised act, to provide uniform superX! sion u°! * llfe insurance companies ISSSUfS, OUt^ Aust I a l ia ’ The soc iety has consistently advocated such a measure, and has given assistance to the Commonwealth Government to secure that the act j-?- the , best possible for Australian Tt gratifying to record that the matter was debated in Parliament on non-party lines and that members from favm»rl!S es ° f House commented favourably upon the system of mutual ’nsurance. as operated in Australia by this society, and similar institutions

staff ’ \ Wl f h^ to 2 ay a special tribute to the work of the Society’s staff, both outdoor, and indoor During the war the society readily made available those members of the staff who desired to enlist, or who were called to the Services; 1760 members of the staff and agents gave full-time service with the Forces, and of these 62 gave lives To the relatives and friends of those fallen the board extends it« deeoes! sympathy. "We welcome back all those who nave returned to us. and we shall do everything in our power to assist in their rehabilitation by giving them special opportunities to acquire the exnerienoo th«-y have missed through prolonged absence. "The absence of so many of the staff on national service, and the additional work

arising from the rapidly increasing business of the society, have thrown on to the remaining members of the staff a very great strain indeed, and the board makes grateful acknowledgement of the loyal and efficient manner in which they have carried on the work of the society, under great difficulties for so long a period. Unfortunately the return to normal working conditions is proving slower than was anticipated. There are still more than 250 of our salaried staff engaged with the Forces but it is hoped that their return will not be much longer delayed, and the strain on the staff thereby eased.

Obituary "I must refer with the deepest regret to the loss sustained by the society through the death last November of the general rtianager, Mr A. W. Sneddon. Mr Sneddon joined the society’s service at the age of 17 in 1897, and after serving in many capacities was appointed general manager in 19?4. During the 11 years of his general managership, his work greatly contributed to the strength and progress of the society. Directors “The directors who retire this year in terms of the by-laws are Mr J. H. F. Fairfax and Dr. S. A. Smith, each of whom was a candidate for election by the members at a ballot held on May 20, the results of which I shall formally announce at a later stage of this meeting. / Branch Boards "The vacancy on Victoria Branch Board occasioned by the death of Sir Arthur Robinson has been filled by the appointment of Mr J. A. Forrest, and in New Zealand Messrs Cliffbrd Plimmer and John Douglas Duncan have been appointed to the Branch Board to fill vacancies caused by the death of Mr D. R. Menzies and the retirement of Mr J. G. Duncan. "Major-General C. S. Steele has been appointed to the Victoria Branch Board and Sir William Glasgow, who resigned from the Queensland Branch Board on his appointment as High Commissioner for Australia in Canada, was reappointed a branch director of the Queensland board on his return to Australia.

Auditors "The auditor retiring in terms of the by-laws is Mr E. S. Wolfenden, who la eligible for re-election and is the only candidate. I shall call presently for a show of hands for his re-election.” (Extended Report by Arrangement.)