AUSTRALIAN MUTUAL PROVIDENT SOCIETY.

Te Aroha News, Volume VIII, Issue 485, 2 July 1890, Page 6

AUSTRALIAN MUTUAL PROVIDENT SOCIETY.

THE ANNUAL MEETING. The forty-first annual meeting of the members of the Australian Mutual Provident Society was held in the vestibule of the Town Hall on Wednesday afternoon, May 2lst. There was a large attendance, and Mr Thomas Littlejohn, Chairman of directors, occupied the chair. There were also on the platform : Messrs J. R. Hill, R. J. King, M.L.A., J. Abbott, M.L.A., J. T. Walker, and A. M. Meeks (directors), Mr M. A. Black (actuary), Mr R. Teece (secretary), and Mr A. C. Stephen (solicitor). Letters of apology were received from one of the directors, Mr James Thomson, who was prevented from attending owing to sudden illness, and Mr W. Vero Read, who had been confined to his room through illness for some days. The annual report was taken as read. The Chairman, in moving the adoption of the report, said: The directors of the society have now the pleasure to lay before the members their report for the year 1839, accompanied by the revenue account and balance-sheet, also by extracts from the actuary’s report to the board, with an appendix giving the valuation of the liabilibilities of the society as at 31st December, 1889, and I desire to offer a few remarks as usual on occasions like the present. It is gratifying to be able to point out an increase of business over the previous year to tho amount of £621,918, by 2,045 policies, and £21,415 5s 5d of annual premiums more than in 1888. The amount of new business completed in 1899 was £3,679,459. The new business for the three months ended March 31,1890, stands thus. The policies are 21 per cent, more than in three months of the previous year. (Hear, hoar.) The amount of interest was 22 per cent, more than in the same three months of the previous year, and the annual premiums were 25 per cent, more than in the same three months of the previous year. This must be accepted as a proof of the revived attachment on the part of the community to their favourite institution after the happy adjustment in 1888 of the complications that previously existed. As must be expected, the number of deaths, and consequently the amount of claims, exceed those for 1888, but according to the actuary’s report the mortality is only 68 and one-half per cent, of the expectation as regards sums assured. The total number of deaths is 649, of which 62, or 9*5 per cent., were from fevers ; 69, or 10’7 per cent., from accidents. So that 20'2 per cent., or one-fifth, of the deaths were from causes against which no examination could afford protection. The accumulated fund shows an excess of £742,311 8s 2d over that of 1888. The special reserves recommended by the actuary, beyond, those necessary to provide for the liabilities under the policies, are particularised in the repoit. These reserves are made in accordance with the practice followed by this society for the last 20 years, of making the stability of the institution the first object of our care. As long as we are receiving yearly a large influx of policies on newly-selected lives, the mortality among such policies during about the first five years of their existence oughb to be, and with us is, much more favourable than is shown by the tables on which we base our calculations. The payment of the claims that might be expected is, however, only deferred and not avoided, and while we are enabled to make a profit out of the additional premiums which these lives are paying, we ought not to consider the sums assured as profit also. The sum of £150,000 in the reserves represents the aggregate of these claims which might have beea expected but have not fallen in. The reserves in connection with premises and nonparticipating fund have been explained to you on previous occasions. A further reserve of £IO,OOO has been made for contingencies, and could be used for the purpose of equalising the bonus in any year hereafter if required. In addition to these, you will notice that the board have set aside a reserve of £IO,OOO to meet possible losses, owing to depreciation of mortgage securities. This has been done after careful scrutiny of the securities. The estimated values of property at the present time are unlikely to err on the side of extravagance, but the board desire to exhibit a statement of accounts free from dependence upon the chance of improved values of properties clearing every individual advance, however small the transactions concerned may be. As stated in the report, the exceptions are few where the mortgage securities are not deemed ample to meet their loans. The board are always anxious and careful to avoid harsh measures with borrowers, and on all occasious afford abundant opportunity for repayment without recourse to extreme measures. I think it only just to our Melbourne Board to say now that at the close of last year there was not one penny of interest in arrear in respect of any mortgage security held there; and I have no doubt you will be glad to learn that the Victorian Board was nob singular in this respect. You will observe that after deducting the £IO,OOO reserve just referred to, the accumulated fund now amounts to £8,911,622 3a sd, of which £625,739 Is 5d is gross surplus. Deducting from this the various reserves already mentioned, and which amount to £198,899 11s Id, we have a divisible surplus of £426,494 3s 6d, which will yield a reversionary bonus of £882,500, which will forthwith be divided among the participating members. Of course the rate of bonus may, and probably will, vary a little from year to year, and the members should not be surprised, much less dissatisfied, if they find that the bonus one year is a little less than that of the year immediately preceding. To make a fair comparison they should take successive periods of two or three years, and they will then find an upward progression that ought to satisfy the most exacting. If you will refer to the actuary’s report, you will see a comparison of the bonuses allotted for different periods covering 26 years, showing that the rates have constantly increased from 20‘5 per cent, of the premiums received during the five years ended 28th February, 1869, to 40'5 per cent, for the three years ended 31st December, 1889. In other words, the rate has doubled.'' You will remember that in his report to the board last year Mr Black stated it as his opinion that the rate of bonus had then practically reached its maximum. Whatever were the various circumstances that sicklied Mr Black’s views on that occasion, ho will rejoice with us that his then (pinion has not squared with the facts; and we must hope that our very observant life assurance competitors wili be so honest and impartial aB to circulate the confutation with the same good intention as they disseminated the “opinion.” lam at liberty to say, and I now assert, j with the view of challenging) contradiction, that no office exists, or ever has existed, in any part of the world, which (after making the stringent reserves that we have made) has been able to show such a constantly increasing and such a present rate of bonus. I wish to speak with no uncertain voice on this matter, and I hope I make myself clear to those whom this abatement concerns. Members will notice that certain portions of the report to the board by the actuary have been omitted, from the present publication. These por-

tions so left out discuss the present method of dividing profit followed by the society, the expenses of management, and a proposal to modify the rate at which the reversionary bonus additions are commuted when surrendered for cash. These suggestions of the actuary having been presented to the board just when their annual report had to be sent to press, there was no time at their disposal for any consideration of the subjects in question (which demand fuller deliberation from your directors than could be given at the twelfth hour). They have meanwhile been left out of their reprint of the actuary’s report to them, and will be taken into consideration in due course, and members will be duly apprised of the conclusions arrived at by the board. The percentage of profit divided among tho assurance policies in 1889 is 41'5 of the premiums received in the year ; the rate of interest is £6 Is per cent., and the expenses of management are only 9‘5 per cent, of the total receipts. The rate of interest is in excess of that of either of the years 1887 and 1888. The expenses of management show a slightly increased rate over last year. For 1887 they were 9 •57 per cent. ; for 1888 they were 9 per cent, of the total receipts. But in the accounts now before you there are included among general expenses considerable sums spent in repairing the properties (in some cases in effecting permanent improvements), and also in purchasing office furniture. This last item should be gradually got rid of as an entry in the assets. With all these pre-eminent results shown by the Australian Mutual Provident Society, is it not surprising that keen-sighted, intelligent men will go out of their way to entrust their most important interests to the keeping of alien institutions, of whose position they can know little or nothing, much of whose estimates or promises may be like the morning cloud or the early dew, and whose customary actions in their underhand solicitations are an offence to common decency ? While the shrewd men referred to move heaven and earth to effect a saving of sixpence or a shilling per cent, in transactions with a fire insurance company or a marine office, they readily make a sacrifice of large sums that would benefit their descendants, by neglecting to acquaint themselves with the relative advantages of competing life assurance companies, and by allowing themselves to be seduced by the most unscrupulous and pertinacious of them, only to come to a knowledge of the true position after they have hopelessly committed themselves. I myself plead guilty to having, like many others, at times looked upon all life assurance offices as alike, their object being, as I imagined, more to secure numerous supporters of their institutions, the maintenance of which afforded their officials pleasant employment and liberal emolument, rather than to make a sure and certain provision for the weak and tender members of families, when deprived of their head by an early death. I have, however, for some time past necessarily more carefully considered the subject; and the more I become acquainted with it, the more am I impressed with its beneficence. To such an extent have I been seized with this feeling, that I am impelled to advocate the cause of life insurance whenever I meet with anyone whom I think a fitting proponent, and of course the Mutual Provident is the best office. This is no figure of speech, for I have recently examined the bonus returns of three large offices doing business in the Old Country, and in which I am insured, and I find the following : One office has added at fhe rate of £1 8s 6d per cent, per annum on sum assured for two quinquenniums. A second, average of three quinquenniums, £1 6s. A third, average of four quinquenninms, £1 8s lid. While the Australian Mutual Provident Society averages in fifteen years, £2 18s 7d 7-15 d ; the last year given, 1888, being £3 12s 7d. And 1889 will be £3 13s 7d. And besides this unparalleled return there is the crowning lustre of the society’s non-forfeiture regulations, particulars of the operation of which are given on page 16 of the report, and the introduction of which into the society’s practice by our actuary cannot be too much estimated. As an illustration of tho value of this great improvement in the society’s system, the following facts are taken from a Queensland paper dated no longer ago than March last, and when you consider that the policies overdue and kept in force as at 31st December last would amount to £1,876,350 at £l5O average, or £2,500,000 at an average of £2OO to each policy, the magnitude of the benefits to the assured becomes apparent. “Queensland Mercantile Gazette,” No. 104, March, 1890:—“The secretary of the A.M.P. Society vouches for the following, which we have much pleasure in republishing :— ‘ In connection with the death of Mr J. S. Booth, a striking proof has come to light of the advantage of the non-forfeiture regulations of the society with which he had insured his life. It will be remembered that Mr Booth died suddenly of heart disease, his death being accelerated by a fright occasioned by the cries of his nursegirl, who ran over a snake while wheeling one of the children in a perambulator. At the time we stated that tho family was not wholly unprovided for ; bub an investigation has proved that the affairs of the deceased were hopelessly involved. On searching among the papers, however, a policy of £3OO issued to him by the A.M.P. Society in December, ISB3, was discovered. The premiums had been paid up to September, 1886, but the member, from want of funds or other reasons, had neglected to make any payment after that date, a period of three years and five ■ months. At first sight the policy seemed to be hopelessly lapsed, but the widow in her trouble and desperation wrote to the society, asking if it were possible to make any payment under it. She received a letter from the resident secretary, Mr W. J. Walker, intimating that owing to the operation of the society’s non-forfeiture regulations, the policy was in full force. The arrears, consisting of 14 quarterly , premiums and interest, amounted to £35 10s 4d, while the surrender value of the policy at the date of death was £36 11s sd. It will be seen, therefore, that had the deceased lived two months longer without paying a premium, the arrears would have exceeded the surrender value, and the policy would have irretrievably lapsed. We are informed that the sum assured and bonuses, without including the bonus for 1889, not yet declared, amount to £339 14s. Deducting the arrears, £35 10s 4d, we have £304 3s 8d payable to the widow. Whilst adverting to Queensland, I am reminded of the successful exposure of an illegal claim made and paid so long ago as the year 1876, but the rectitude of which was doubted by some of our staff. The circumstances were kept in mind by them, and considerable efforts were pub forth from time to time to follow certain clues supposed to lead to the discovery of the person assured, and these efforts, though for a long time fruitless, were at last crowned with success—he was unearthed alive and life-like ; and much to the credit, of the zealous and able officers concerned, the money wrongfully claimed was recovered with interest, being together nearly £5,000 rescued to the society’s fund. The board showed their appreciation of this meritorious conduct on the part of the society’s officers by a cordial vote of thanks

to them, and it is a pleasure to have such an instance of faithful and disinterested service to the society to record. The conduct of the business in each of the colonies is very satisfactory, a 3 the society has in each colony most excellent boards, and has amongst its staff accomplished and intelligent officers, the great majority of whom have been trained in the society s employ, and who will yet have furthe r opportunities of rendering it good service. It is said of life assurance, as of some other important things, unless you progress you fall behind or decline. This maxim should be steadily kept in view by all our members, and should stir them up to obtain new members, and thereby benefit their friends and themselves. We have a number of canvassers, and some of them are active and successful in securing business, which is satisfactory, but the cost of its procurement is considerable, and if our members would but induce their friends to come to us for policies the ratio of expenses would be lessened, while the regular canvassers would not be disturbed in their operations with the general public. Your directors trust that this will be kept well in view for the future, and that the result will be a still more remarkable report in each succeeding year. The labour and care which your directors have to give to the important affairs which constantly engage their attention demand qualities on their part which can only be got by experience and observation. The board of tho Australian Mutual Provident Society is not the place for a learner in the work, but for one who comes ready to take his full share of duty. It is with much pleasure and thankfulness that I own my indebtedness in my position as chairman to the members of the board for their able support and indulgence for my shortcomings; aud I trust that the society will always have at its head men as capable as those with whom I have boen associated at its board, and who will seek the honour of the position not for the sake of the remuneration, but from a desire to be useful to their fellow-members. I shall conclude by saying that the facts set out in the report now presented to you need but little comment. They tell the story of the society’s progress with a directness that no eloquence can strengthen and with a simplicity that can be comprehended by the humblest understanding. When, from causes which need not now be dwelt on, the new business of each of the years 1886, 1887, and 1888, exhibited a slight decline on that of its predecessor, there were not wanting those who, envious of the society’s pre-eminence, rejoiced at what they pretended to believe was the herald of its retrogression. The fact was lost sight of that although this decline was apparent, the new business was still in each of these years larger (with the exception of one year’s business of one office) than the business of any other office in the British Empire. And so high is the appreciation in which the society is held in the Old Country that an eligible proposal (one of many such) for a considerable amount on the life of the manager of one of the largest British offices has recently been made by the gentleman himself. Owing, however, to the construction which the board placed on the by-laws regulating the acceptance of risks, this very eligible and flattering proposal had to be refused. The society’s income is now larger than that of any ordinary life office in the United Kingdom. In the amount of its accumulated fund it is surpassed by only one, while in the returns by way of bonus to the policyholders it is nob equalled by any office in the world. In spite of all opposition, in the face of the keenest, and in some cases most unscrupulous opposition, irrespective of the increase or decrease, of new business, the rate of interest on the investments has been kept fairly constant in excess of 6 per cent.; the ratio of expenees to premium income—the only true test of economy—has on the whole consistently decreased with the increasing age of the office and the accumulation of it 3 business. The standard of reserve for the liabilities has been increased from time to time, until it is now more stringent than that adopted by any other office, foreign or colonial, transacting business in these colonies. Concurrently with all this there has been a constant increase in the bonuses allotted to policyholders, so that with the increase of security there has come an increase of profit. If the history of the past may be aceepted as an index of tho future, there is every reason to believe that the Australian Mutual Provident Society will continue to occupy the position which it now holds—that of the most successful life office which the world has yet seen.