ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1937.

Appendix to the Journals of the House of Representatives, 1938 Session I, H-08

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1938. NEW ZEALAND.

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1937.

Presented to both Houses of the General Assembly pursuant to the Provisions of the Government Life Insurance Act, 1908.

Government Insurance Office, Wellington, 26th April, 1938. I have the honour to submit the following report upon the transactions of the Department for the year ended 31st December, 1937, and its position at that date. The Revenue Account, Balance-sheet, and Statement of Business are appended. New Business and Amount of Business in Force.—New business for the year amounted to 9,727 policies, assuring the sum of £3,431,940, the premiums thereon being £77,770 per annum. Fiftythree annuities were also granted, the purchase-money being £44,772. The total business in force at the end of the year (including immediate, deferred, and contingent annuities for £90,401 per annum) comprises 80,959 policies, bearing an annual premium income of £716,807. The total sum assured is £26,099,449, to which reversionary bonuses amounting to £3,309,687 have been added. Income. — The total income amounted to £1,219,305, made up as follows : Premium income, £765,146 ; interest income (net) £409,387 ; annuity-purchase money, £44,772. The total for the year exceeded that for the previous year by £34,605. Outgoings.—During the year 1,622 policies became claims by the death of the policyholders and by maturity, the payment involved being £553,308. The total amount paid in claims since the inception of the Department amounts to £15,848,645. Accumulated Funds.—Assurance, Annuity, and Endowment Funds, apart from special reserves of £416,954, now stand at £10,349,248, an increase of £396,937 over the previous year. Investments. —On the 31st December, 1937, the total assets of the Department amounted to £10,853,413, and were invested as follows : — Class of Investment. Percentage °f Total Assets. Mortgages of freehold property .. .. .. . . .. 42 • 2 Government securities, including rural advances bonds .. . . 23 • 2 Local-body debentures .. .. .. .. .. ..16-6 Loans on policies .. .. .. .. .. .. ..11-4 Landed and house property .. .. .. .. .. .. 3-4 Miscellaneous assets . . . . . . .. .. . . .. 3-2 Annual Bonus Distribution.—The usual bonus investigation was carried out by the Actuary, and his report, appended hereto, discloses a net surplus of £251,978 (excluding interim bonuses paid during the year) in respect of this year. Of this sum, £243,182 was allotted in the form of compound reversionary bonuses upon the sum assured and existing bonuses, the total reversionary bonuses thus allotted amounting to £398,855. The bonus at the rate declared last year has been maintained. Since the inception of the Department in 1870, £5,332,113 in cash has been distributed by way of bonus, the corresponding additions to the sums assured being £8,862,505.

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Expense Ratios.—The ratio of expenses to (a) total income and (6) premium income for 1935, 1936 and 1937 is as follows :— Ratio of expenses to — 1935. 1936. 1937. (а) Total income .. .. .. .. 8-62 9-17 10-35 (б) Premium income .. .. ..13-39 14-01 15-58 The expense ratios must be regarded as very satisfactory in view of the fact that the new business (and consequently the commission payable) was the highest in the history of the Department. General.—Summarizing the results for the year :— (1) The new business was again the highest ever transacted by the Department in any one year. (2) The total income increased by £34,605. (3) Claims increased by £18,750. (4) Total funds increased by £396,937. (5) Profits divided amounted to £243,182. Last year I referred to the introduction of a new form of table mortgage in which the rates of interest are revisable every five years. This form of mortgage has proved popular, and the sum of £400,000 has been advanced under this system. In conclusion, I should like to pay a tribute to the good work done by all members of the staff (both office and field). It is due to their efficiency, zeal, and loyalty that the Department holds such a high position in the keenly competitive field of life insurance. W. E. Arnold, Commissioner.

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-Revenue Account of the (Government Life Insurance Department for the Year ended 31st December, 1937. £ s. d. £ s. d. Amount of funds at Ist January, 1937.. 9,952,310 18 1 Death claims under assurance policies, Renewal premiums—-Assurance, annu- including bonus additions .. 209,161 4 0 ity, and endowment, less reinsurance Endowment assurances matured, includpremiums .. .. .. 630,885 9 10 ing bonus additions .. .. 330,932 0 5 New premiums (including instalments Endowments matured .. .. 12,841 19 0 of first year's premiums falling due Premiums returned on endowments .. 373 5 9 in the year) less reinsurance premiums 75,094 7 10 Bonuses surrendered for cash .. 7,004 6 5 Single premiums—Assurance and en- Annuities .. .. .. 33,56370 dowment .. .. .. 59,166 6 8 Surrenders .. .. .. 37,501 8 7 Consideration for annuities .. .. 44,771 18 3 Loans released by surrender.. .. 63,759 6 0 Interest, rent, and other £ s. d. £ s. d. income .. 444,911 10 6 Commission, new .. 56,213 16 6 Less land and in- ~ renewal 5,398 13 2 come tax, £34,096 — 61,612 9 8 17s. Id.; property Contribution to Public Service Superexpenses, £1,427 annuation Fund .. .. 732 1 4 4s. 4d. .. 35,524 1 5 £ s. d. — 409,387 9 1 Expenses of management— Salaries .. .. 43,584 2 8 Extra clerical assistance .. .. 568 9 0 Medical fees and expenses .. .. 2,594 13 6 Travelling-expenses 829 9 9 Advertising .. 1,751 1 1 Printing and stationery .. .. 1,995 6 4 Rent .. .. 4,660 19 7 Postage and telegrams .. .. 1,857 2 5 Exchange.. .. 64 3 11 Audit fees .. 325 0 0 General expenses .. 5,574 13 10 63,805 2 1 Property depreciation .. .. 1,081 13 1 Amount of funds, 31st December, 1937 10,349,248 6 5 £11,171,616 9 9 £11,171,616 9 9 Balance-sheet of the Government Life Insurance Department on 31st December, 1937. Liabilities. £ s. d. Assets. £ s. d. Total assurance, annuity, and en- Loans on policies .. .. .. 1,242,926 19 9 dowment funds (as per Revenue New Zealand Government securities .. 2,519,160 0 0 Account) .. .. .. 10,349,248 6 5 Loans to local bodies .. .. 1,798,322 1 9 Claims admitted, proofs not yet Landed and house property .. 369,435 8 1 completed .. .. .. 44,444 5 0 Landed and house property (leasehold) 1,201 11 5 Annuities .. .. .. 324 4 11 Mortgages on property .. .. 4,575,854 9 3 Medical fees .. .. .. 361 4 0 Properties acquired by foreclosure .. 23,631 1 1 Premium and other deposits .. 19,013 4 7 Overdue premiums on £ s. d. Sundry creditors .. .. .. 10,403 18 11 policies in force .. 4,132 13 7 Accident and Fidelity Fund.. .. 5,000 0 0 Outstanding premiums Investment Fluctuation Reserve . . 411,954 12 3 due but not overdue 54,896 2 4 Sinking funds on local £ s. d. 59,028 15 11 body loans .. 12,485 16 11 Overdue interest .. 26,245 13 7 Interest accrued there- Outstanding interest on .. .. 177 14 0 due but not overdue 12,520 3 11 12,663 10 11 Interest accrued but not due .. .. 99,299 17 8 138,065 15 2 Sundry debtors .. .. .. 1,481 19 2 Income-tax paid in advance.. .. 30,000 0 0 Cash in hand and on current account.. 94,305 5 5 £10,853,413 7 0 £10,853,413 7 0 W. E. Arnold, Commissioner. J. W. Macdonald; Secretary. Government Life Insurance Department. The Audit Office, having examined the Revenue Account and Balance-sheet, and compared them with the relative books, documents, and securities, hereby certifies them to be in accordance therewith. —-J. H. Fowler, Controller and Auditor-General.

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Statement of Business

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TOTAL. j Whole-life and Term Assurances. YEAR 1937. y ; 1 ! | i Annual \ Annuities. 1, Sum ; Annual Sum ! Premiums. j Immediate or assured. VCr ~ Premiums. No- j assured. i tKSSSS, 1 - 0rdimr V- entered upon. No ' 2. Deferred 1■ Ordinary. \ ) Bosses. it Extra. | 2. Deferred. Annuity. Bonuses. g Extra. POLICIES ISSUED AND DISCON- £ £ £ s. d. £ s. d. £ £ £ s. d. Policies in force at 31st 74,69123,761,2533,136,722 / 668,914 5 432,629 6 4)11,242 4,633,186 524,653 (112,792 7 9 1 December, 1936 \ 1,518 9 1048,897 13 8 [ 38,304 p.a. 1 593 13 9 J New business .. .. 9,780 3,431,940 .. ( 77,593 8 5 3,491 0 2 1 2,063 1,112,513 .. 119,197 8 2 1 1 176 12 5 7,572 2 4 J 5>616 p . a . \ 65 12 11 f Bonus allotted .. .. .. 369,083 .. .. .. .. 45,243 Total.. .. 84,47127,193,1933,505,805 / 746,507 13 936,120 6 6113,305 5,745,699 569,896 (131,989 15 11) | 1,695 2 356,469 16 0/ 43,920 p.a. 1 659 6 8J Policies discontinued 3,512 1,093,744 196,118 I 31,278 11 4 1,484 2 0 ) 562 264,611 37,879 f 4,926 19 2) during 1937 j 117 9 4 704 15 8 f 504 p.a. j 38 8 5f Total policies in force at 80,959 26,099,449 3,309,687 / 715,229 2 5 34,636 4 6 ) 12,743 5,481,088 532,017 /127,062 16 9) 31st December, 1937 1 1,577 12 11 55,765 0 4j 43,416 p.a. { 620 18 3j PARTICULARS OP POLICIES DISCON How discontinued. By Death .. .. 577 164,673 50,799 f 4,984 11 3 1,484 2 0} 256 83,561 31,604 f 2,238 14 2) t 52 3 9 j | 26 18 If Maturity .. .. 1,045 260,855 81,093 / 9,944 8 10) 1 9 15 7 f Surrender.. .. 955 305,265 44,039 / 8,644 7 1 1 139 68,106 4,881 / 1,301 16 9 1 1 18 16 3 288 0 0) 144 p.a. \ 7 10 4 \ Change to other 66 26,053 1,833 / 422 13 6 .. j 31 14,828 128 / 151 4 3) Tables ( 2 0 0 128 15 8 j 72 p.a. ( 2 0 0 j Cancellation .. 188 55,114 121 / 1,411 2 9', .. 17 6,332 17 106 18 5'l 1 1 14 8/ 1 .. } Lapse .. .. 681 281,784 18,233 1 5,871 7 11 .. ) 119 91,784 1,249 / 1,128 5 7) 1 32 19 1 288 0 0 [ 288 p.a. { 2 0 0 j Total discontinued during 3,512 1,093,744 196,118 / 31,278 11 4 1,484 2 0 | 562 264,611 37,879 / 4,926 19 2) year 1937 | 117 9 4 704 15 8 f 504 p.a. { 38 8 5 f ; . __J PROGRESS OP BUSINESS OF THE GOVERNMENT LIFE INSURANCE Total issued .. .. 247,123 70,666,997 8,463,737 1i? 203,179 19 6 57,852 20,168,980 2,556,946 ®l ( 11 1 ) 46,828 16s. p.a. v lo,obU y /) Total void .. .. 166,164 44,567,548 5,154,050 jg ° j 112,778 14 8 45,109 14,687,892 2,024,929 | 3 f|*||| \\ 4} Total in force .. 80,959 26,099,449 3,309,687 715,229 2 5 90,401 4 10 12,743 5,481,088 532,017 127,062 16 9 43,416 p.a. Extra Premiums .. .. .. 1,577 12 11 .. .. .. .. 620 18 3 £716,806 15 4 £127,683 15 0 Note.—The " ordinary " premium is the premium charged

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at End of Year 1937.

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ASSURANCES. SIMPLE ANNUITIES. ENDOWMENTS, Endowment Assurances. Annuity Assurances. INVESTMENTS, ETC. | , o., m I Annual Su ™ Annuities. I I Annuities. x - Sum Annual „ i assured. | J* 6 ™!/ Premiums. | »'j i mmedi ate or\ Annual Nn D Annual h immediate or No Pren >™ ms - No ' 2 Deferred 4 lon y 1. Ordinary. entered upon. < Premiums. Premiums, j entered upon. sionarv 1. Ordinary. [ Annulfr. r onuB68 - Extra. Bonuses. |»- \ Bonases. 2 Extra - TINUED DURING THE YEAR 1937. £ £ £ s. d. £ £ s. d. £ s. d. £ s. d. £ s. d. £ £ s, d. 57,69816,640,L442,587,922 (528,313 8 10) 20 j 4,947 320 5 2)169 8 8 526 35 15 6 132,309 1 2 } 5,210 12,482.976 27,603 4 71 9,378 p.a. i 908 7 1J 1 1,610 975 13 8 I ] 240 0 0 [ \ 22,537 16 9 0) 6 531 1,703,691 ., f 52,010 19 01 .. 50 / .. \ 22 18 0 53 .. ( 3,491 0 2 1 1,133 f 615,686 6,362 3 3l l,656p.tt. 1 109 2 0) \ 2 4/ i 300 0 0 / \ .. 117 61 321,008 .. .. 114 .. .. .. .. .. .. 2,718 64,224 18,343,835 2,908,930(580,324 7 10) 20 j 4,997 320 5 2)192 6 8 579 35 15 6 ( 35,800 1 4 1 6,343 (3,098,662 33,965 7 101 11,034 p.a. \ 1,017 9 11 ( 1,724 975 16 0 j f 540 0 0 ) \ 25,255 18 6 6J 2,630 729,099 155,144 I 24,791 3 31 1 I 150 .. 18 6 8 42 j 1,484 2 0 ) 277 j 99,284 1,552 2 3) 144 p.a. 1 79 Oil} 1 77 ; 56 15 8 f \ j \ 3,018 } 61 59417,614,136 2,753,786 (555,533 4 71 19 ( 4,847 320 5 2 I 184 0 0 537 35 15 6( 34,315 19 4 ) 6,066 (2,999,378 32,413 5 7| 10,890 p.a. { 938 8 2f \ 1,647 919 0 4 J \ 540 0 0 J 1 22,237 18 6 6} TINUED DURING THE YEAR 1937. 262 73,812 19,195 j 2,676 3 0) .. .. .. .. 42 .. 1,484 2 0 17 7,300 69 14 1 1 25 5 8 J v 970 250,805 78,336 ( 9,545 9 4 .. .. .. .. .. .. 75 f 10,050 398 19 6) | 9 15 7 | t 2,757 .. ) 745 211,725 39,158 ( 6,886 16 2) .. .. .. .. •• •• 71 25,434 455 14 2 144 p.a. ( 11 5 11 J 32 10,075 1,628 ( 251 11 9 1 / 150 .. ) 8 6 8.. .. .. 2 1,000 11 10 10 | .. j \ 77 56 15 8 } 155 40,482 104 ( 1,213 4 11.. .. .. .. .. .. •• 16 8,300 91 0 3 t 1 14 8 )' 466 142,800 16,723 ( 4,217 18 11 | .. .. .. .. •• •• •• 96 1 47,200 525 3 5i j 30 19 1 f 1 261 .. } 2,630 729,699 155,144 124,791 3 3 1 l j .150 1 8 6 8 42 .. f 1,484 2 0 I 277 j 99,284 1,552 2 31 144 p.a. 1 79 0 11 f j| 77 56 15 8 f 1 J 1 3,018 .. } DEPARTMENT SINCE DATE OF ESTABLISHMENT TO 31st DECEMBER, 1937. 173,584 5,838,170 j { " g} 1,181 ) } 60,175 1 10 9,387 16 91,520 888 2 2 83,907 5 8 13036 { *' 68, "VI of 111,990 3 'OS 4 - 38 4| | ig 1 58,935 16 4 9,203 16 9 983 852 6 8 49,051 6 4 6,970 j 36,136 U 9| 61,59417,614,136 2,753,786 555,533 4 7 19 | i'547 [ 1,239 5 6 184 0 0 537 35 15 6 34,855 19 4 6,066 j 32,413 5 7 10,890 p.a. ( ' ' .. 988 8 2 .. | .. •• .. •• •• •• •• 18 6 6 * £556,471 12 9 £184 0 0 £35 15 6 £32,431 12 1 at the true age; the " extra" the additional premium charged for any reason whatsoever. „ T _ A . . W. E. Abnold, Commissioner. S. Bbokinosalb, P.I.A., Actuary.

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ACTUARY'S REPORT ON THE VALUATION OF THE GOVERNMENT INSURANCE DEPARTMENT AS AT 31st DECEMBER, 1937.

Presented, to both Houses of the General Assembly pursuant to Section 40 of the Government Life Insurance Act, I'JOH.

Wellington, 6th May, 1938. In accordance with your instructions, a valuation of the Department's liabilities under its policies has been made for the year ended 31st December, 1937, with the object of ascertaining the net surplus available for distribution amongst the policyholders, and, in accordance with section 40 of the Government Life Insurance Act of 1908, and amendments, I have the honour to report as follows : — The liabilities arise in respect of 80,959 policies assuring, inclusive of bonus additions, the sum of £29,409,136 and £90,401 immediate and deferred annuities per annum, the Office premiums thereon amounting to £716,807 per annum. The bases adopted for the valuation were as follows : — (a) Endowments : 3 per cent, interest without mortality. (b) Temporary Assurances : The proportion of the premiums corresponding to the unexpired risk. (c) All other Classes of Assurance : The 0 m mortality table with 3 per cent, interest. (d) Annuities : The a(m) and a(f) mortality tables with 3 per cent, interest. The net premium method of valuation was employed in respect of groups (a) and (c) above, and, in addition to the liability brought out on that basis, reserves for future bonuses, immediate payment of claims, and other contingencies were included. The valuation has disclosed a total surplus of £256,913, as follows : — £ Total funds at 31st December, 1937 .. .. .. .. 10,349,248 Less value of liabilities .. .. .. .. .. .. 10,097,270 Net surplus .. .. .. .. .. .. 251,978 Interim bonus paid during year .. . . .. . . . . 4,935 Total surplus .. .. .. .. .. .. £256,913 As required by the Act, surplus arising from favourable mortality has been investigated separately for the General and Temperance Sections, the result indicating that the same rates of bonus should be allotted to policies of the same class in both sections. I accordingly recommend that the following rates of compound reversionary bonus be declared on the sum assured and existing bonuses in respect of each full year's premium paid during the year :■ — Policies issued under Present Premium Tables. , i • J\t Cent. Whole-life assurances, and long-term endowment assurances •maturing at £ s . d. ages 80 and over .. .. .. .. .. ..200 Other endowment assurances .. .. . . . . 1 15 0 Double-endowment assurances and pure endowments . . .. ..150 Policies issued under Premium Tables which have been closed. Whole-life and endowment assurances .. .. .. ..1150 Double endowments . . . . . . .. . . 1 10 0 The above bonuses will absorb the sum of £243,182, and I recommend that the balance of the net surplus (£8,796) be carried forward. S. Beckingsale, F.1.A., Actuary. The Government Insurance Commissioner, Wellington.

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