NORWICH MUTUAL LIFE OFFICE.

Dominion, Volume 6, Issue 1794, 5 July 1913, Page 6

NORWICH MUTUAL LIFE OFFICE.

ANNUAL MEETING. THE PROGRESS OF LIFE INSURANCE. Tho 105 th annual meeting of tlio Norwich' Unoin Life Insurance Society was hold on Wednesday, May 28, in tho offioes, Surrey Stroot, Norwich,, when tho report and balance-sheet were presented, and other routine business was transacted. The president, Mr. H. S. Robinson, was in tho chair. Tho general manager read the 105 th annual report as under inordinary Life Business—The proposals received during the year numbered 11,983 for .£6,540,080, of which 1403 for .£1,244.198 wero declined or not completed, while 10,580 policies wero issued, insuring £5,295,882 and carrying new premiums of .£227,379. The net new business retained by tho society at its own risk was £4,930,0/6, as against £4,677,155 in 1911. Leasehold' and Capital Redemption Insurances.—ln addition to the above, the society received tho sum of £23,502 lis! 2d, as premiums for leasehold and capital redemption insurances completed during tho year. income and Funds.—Tho income for the year was £1,971,669 7a. 10d., and tlio outgoings (including a provision for every outstanding claim) £1,334,386 lis. 3d. Tho difference, £637,282 16s. 7d., constitutes the increase in tho funds which at the close of the year amoumted to £10,928,114 12s. lOd. The interest, dividends, ctc., received during the year amounted to £428,619 7s. 3d., which shows a net return on tho mean funds, including all unproductive assets, of £4 2s. 6d. per. cent., after deduction of incomo tax. Tho amount of the Scottish Imperial Fund at tho close of tho year was £672,062 16s. 4d., making a total for the two funds of £11,600,177 9s. 2d.

Mortality Investigation—During the year 780 policies for £424,74 1 10s. Bd. (including bonuses) became claims by death, which amount has bpen shown by tho usual mortality investigation to be £149,010 less than the sum oxpected. In addition there 'were 444 claims for £148,335 17s. Bd. by eurvivance. CHAIRMAN'S SPEECH. The President, in moving tho adoption of tho report, said:—Tho report and. accounts in your hands speak eloquently for themselves, but I am glad to bave the opportunity of briefly commenting on them from the chair. This is the seventh annual meeting at which I havo had tho honour of presiding, and I confess that, in acooradnce with the law of average °n which the whole fabrio of our business of life insurance is based, I liave kept expecting that one of these days I should havo the novel experience of drawing your attention to some weak 6pot in the account of our operations for tho year. Well, gentlemen, if you liavo had time to study tho figures before y&u, you will agree that my unlucky day—if it. is ever to come—haa at least not arrived an this 13th year of tho 20th century-ouir report is a wonderfully good ono, no other words adequately describe it, and it is all the more remarkable because it relates to a year which was fraught with anxiety to those responsible for .the safeguarding and maintenance of capital values running, as in our case, into many millions. I have read with 6peoinl in-

terest tho reports of tho proceedings at recent meetings similiar to our own, and no chairman has, I think, sought to minirniso tho seriousness of tho shrinkago which occurred in 1912 in Slock Exchange values of tho class to which tho Life Offices of this country look for tho investment of their funds. Coming on the back of a slow decline during tho last ten or more years, this further shrinkage has been specially vexatious, and office after office, in order to keep pace with it, has I see had in ordinary oourse to deploto its Life Assurance Fund, either by a direct writing-oil or by transfer to Investment Eeserve. ' We have, so far. been fortunate in this matter. We do not claim to have been wiser or more prophetic than our neighbours, but, as you know, wo revised our investment values l'ully 18 months ago on the occasion of our quinquennial valuation, , : ,we have during these 18 mdritlis had 'a considerable share of good fortune, and wo have actually been able, as you will see, to include our Stock Exchango securities in tho accounts at or below market value without in any way dipping into our Assurance Fund. I do not wish to make too muoh of this point, for of course if tho shrinkago should continue throughout 1918, tho same good fortune may not follow us. Wo have, however, travelled almost one-third of the road towards our next quinquennial goal, and it is at least satisfactory to know that over that distance our values have so well held their own. How havo wo fared in 1912 as regards tho four other essentials of successful management? What new business record havo wo to 6how, and, equally important, at what cost ? Have wo earned a sound—not a phenomenally high—return on our invested funds, and has our mortality experience been favourable or tho reverse? Tho answer to each of theso questions, you will agree, is emphatically favourable. As regards tho new business of tho year you will see that, in spite of what 1 said last year as to our continued determination to regard economy first and production second, wo have onoe more broken even our own record—which I need hardly remind you is equivalent to saying that wo have again completed a volume of now business far in excess of that of any other homo office not transacting business of an industrial type. Tho business recorded as retained at our own' risk was fully a quarter of a million in excess of that of 1911, and, as you will see from the new business noto at the foot of our assurance revenue aocount, wo could have claimed, had we wished, that tho actual increase was more than Tho note I refer :to arises from tho fact that during the year a law monopolising life insurance in Italy was passed, in consequence of which wo had to consider the best steps' to be taken in tho interests of our policy holders in Italy, and of our policy holders generally. As regards tho tormer, I am glad to say wo wore able to arrange that on transfer to the Government Offico, thoy should continue, with the guarantoo of tho Government, to enjoy by way of reduction of premium tho handsome 6calo of bonus wo had been able to allocate to them in tho past, and, as there would certainly in tho luturo have been no bonus or a very much reduced onb for them, had wo continued to drag out a precarious and hampered existence ir. Italy under tho alternative conditions provided by tho law, tho wisdom and propriety of the course wo took was clear. So far as tho interests of tho office generally are concerned, wo 'havo been a bio to arrango sound and satisfactory terms of transfer. Turning now to the question of tho cost of which our vast volume of new business has been put on the books, and our existing business administered duiring the year, you ■may recollect that a year ago I had the satisfaction of reporting that our ratio of expenditure to premium income, already most moderate looking to tho volume of new business, had for 1911 decreased quite notably. The further increaso of now business in 1912 might well havo implied increased expenditure, but -that was f.ot so. The ratio remained practically unaltered—indeed on.our usual analysis as between new business and renewals tho figures work out slightly lower, namely, Cl.B per cent, on now business and li.lß per cent, on renewals, against C 3.1 and U. 31 respectively for 1911—a striking standard of economy. As regards our interest yield for the year, this works out at exactly tho same satisfactory and conservative figuro as in 1311, namely, .il 2s. (id. per cent., after allowance of incomo tax, in contrast with the rate of only 2J per cent., which wo reckon on in our calculation of reserves. Our mortality calculations s'ho-v that cfrtrms for tho year wore just oil .2150,000 below expectation. Therefore, to sum up the account of our stewardship—we have been able to maintain capital values in a,,yoar of general shrinkage. We have WTitten a record now business at an exceptionally low measure of cost. Wo havo earned on invested funds a return as much as ljf per cent, in excess of what wo reckon on in our calculation of reserves, and our mortality experience for tho year has worked out at 74 per cent, of expectation. I think you will agree that the words, "wonderfully good," which at tho outset I applied to our report, err, if anything, on the side of moderation, and that our old society during tho year has progressed from strength to strength. So much for the actual results of the year. A"t tho risk of wearying you I should like, in conclusion, to draw your attention as briefly as possiblo to a general consideration which, I think, has a direct bearing on future prosperity. Taking a fairly broad surrey of insurance investment in this country during tho last quarter of a century- I am inclined to group tho life

offices into three categories. First, tliore aro the offices which during that long period havo, roughly speaking, distributed surplus as it has been earned quinquennium by quinquennium, and havo not sought still further to strengthen reserves already quit® conservative. Naturally, tho problem of shrinkage of capital values of recent years has interested these offices very directly. Then there is a eccoud group which havo aUo, so far as published figures aro concerned, adhered, generally speaking, to one fixed standard of reserve, but whioh during tho early years of expanding capital values did not distribute these improved values as surplus, retaining them as a oonccaled extra reserve by the process of recording investments at oost price only in their annual accounts. A glance at tho aocqunta so far published for 1912 seems to show that lator lean years have, generally speaking, more than absorbed these conoealcd margins of profit. Then there is a third, and a very small and select group, and I am glad, and even thankful, to feel that it includes tho Norwich Union Office, which in tho early years were, us it then seemed, so ultra-conservative as to refrain from distributing improved values as profit, or even from retaining them as concealed reserves, but which preferred to disclose them in acoount, and apply them directly towards the building up of a still stronger basis of reserve. As you know, tho Norwich Union managed gradually to transform its reserves from a 3} per oont. basis to our present bedrock 2| per ccnt. strength. Looking back on tho last ten years, I am glad to think that wo thus put it out of our power, so to speak, to distribute, as surplus theoretically earned in the,so later and leaner years, what was really accumulated during tho earlier years of expanding capital values. Wo in this very small tnird. group can afford with relative philosophy to- view tho problem of shrinking valueß— if it continues on the scalo of tho last ten years wo aro, broadly speaking, just 1 where wo have been during these ten years, in which tho Norwich Union haa managed not only to maintain, but to in* oreaso its bonuses; while, of course, if the shrinkage should ceaso, or if there should before long oven bo a slow upward movement, our position will bo a specially happy ono. Sir Peter Bade, in escondiae the adoption of the report, said although the society was 105 years old, it had never exhibited more symptoms of youth and vigour than during tho past year, and thero was every reason to boliovo that it would continue its energctio progress. The insuring public were showing increasing confidence in tho Norwich. Union, and year by year tho business was enlarging, Tho report and accounts were adopted. The New Zealand directors are Dr. A. K. Newman, M.P., Mr, R.D. D. M'Lean, and Mr. Bernard Chambers. Mr. A. E. lvernot is the attorney and general manager of tho 60cicty.