NATIONAL MUTUAL LIFE

Evening Post, Volume CXIII, Issue 2, 4 January 1932, Page 10

NATIONAL MUTUAL LIFE

NEW BUSINESS STILL LARGE

HEAAT TAXATION ON INTEREST

A sound -financial position, despite general adverse conditions, is disclosed in the report of the directors of the National Mutual Life Association of Australasia, Ltd., which was presented at the annual meeting of members on 22nd December, 1931. Presenting the report, the chairman of directors (Sir John MacJTarland) said: "The affairs of established life assurance companies can be taken as a reliable barometer of the linancial and economic conditions of the communities in which they do business. Their membcio are a large proportion of the people, and they belong to all classesthe companies' affairs are identical with, their affairs; everything that affects their welfare affects the companies. Ifc is to be expected, therefore, that the difficult conditions which have prevailed in all parts of the world during the last year will somewhat check the progress of life assurance business.

"The new business transacted by the association during the year consists ot 10,849 policies, assuring £6,113 517 The average amount assured under' the 10,549 policies is only £387, which is lower than the average for many years past. This is tho principal item m_ the report which shows tho effect ox tho prevailing conditions. The aniouut of new business does not of course, in itself indicate the progress ot a company; every new policy is a new liability, and there can be no progress unless adequate provision is made out of the current revenue to meet this liability.

The amount of the claims which became payable through the death of policyholders is loss than'.6o per cent of the. amount that would have been paid if the deaths had been equal to the expectation according to the tables oi- mortality upon which our premiums arc based. Forty-one policyholdcrs who were assured for £18,211 died during the first year of assurance: the average duration of all the claim policies was IS years and 7 mouths. "The amount paid for rates and taxes, which,.: following the approved practice, is deducted from.the interest received as stated in the- revenue account, amounted to £253,0-IP, or £127,207- more than the amount deducted in 1930. The amount paid in taxes is equal to nearly os in the £, or 15 per cent, of the gross amount of interest received. The t;ix is actually a penalty imposed upon the policyhold"ers, who have to bear the whole of the burden because they have prudently made provision for their dependants Life- polieyholdcrs are, in fact, under existing legislation, the most heavily taxed, class in the community. "The amount paid to policvholders during tho year is £3,317^599, or £758,490 more than the amount paid m 1930. Of this increase £410,210 is due to the surrender of policies and bonuses. The surrender of a policy is generally an indication of the monetary need of the holder, and a large increase in the amount paid might be expected under present conditions, but it'is gratifying to find that after allowing for some exceptional cases the ordinary surrenders are lesa than in the previous year. Four policies for large amounts—£s2o,ooo in all—one of them was for £-100,000—which had been taken out for special purposes, but owing to business developments were no longer required, were surrendered during tho year. The amount paid in respect to the surrender of these policies was £477,289, so that allowing for exceptional cases the amount paid this year for the surrender of policies and bonuses is £.67,073 less than in 1930. This may be taken as an indication that members realise the importance- of retaining in spite of iiard times the valuable investments that their policies represent.

"Tho total expenses of managing the business of the association for the year arc £50,507 less tban they were in 1930. "The amount added to the funds as the result of the year's transactions is .€1,037,040. "The valuation -which-is to be made as at 30th-September last has advanced far enough to enable me to inform you that tho amount added to the funds, making them £34,555,433 16s 6d, is more than sufficient to provide for the increase in the association's liabilities during the year. The surplus, which consists of premiums paid by members in excess of the amounts that have been found to bo necessary to provide the benefits under their policies, shown in the valuation report, will be larger than-the surplus shown at any previous valuation. A meeting will be called early in the New Year to receive the report of tho valuation. "The principal change during the year in the assets shown in. the balancesheet is an increase of £708,000 in Government securities. The increase in the amount of interest outstanding is duo to the difficult position in which many of our borrowers were placed through the. failure of their crops or the low prices they were getting for their produce. lv every case where after inquiry it was. considered safe to do-so. tho time for payment of interest has been extended. There arc now good prospects that tho amounts overdue will soon be paid. "There are already, 1 think, signs of belter times ahead. I hope by the time of our next annual meeting that the world'will have found what one of onr most eminent advisers has described as 'the path of financial peace.' " Sir John MaeFarland expressed tho thanks of the directors and members to the officers and staff of the association, ami especially the staffs of the new business departments, who had done excellent work in the last year under very unfavourable conditions, lie then : moved that the report be adopted. The motion, seconded by Mr. Herbert Brookes, was agreed to. Tho retiring directors. Sir Robert Gibson, Sir David Onno Masson, Sir Brudenall White, and Mr. Herbert Brookes, were re-olceted, and tho auditors, Messrs. W. M. Jarviu and H. G. Tudehope, were renppointcd. 1 (Published by arrangement.)