ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1940.

Appendix to the Journals of the House of Representatives, 1941 Session I, H-08

H. —'8.

1941. NEW ZEALAND.

ANNUAL REPORT OF THE GOVERNMENT INSURANCE COMMISSIONER FOR THE YEAR ENDED 31st DECEMBER, 1940.

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

Government Insurance Office, Wellington, Ist May, 1941. I have the honour to submit the following report upon the transactions of the Department for the year ended 31st December, 1940, and its position at that date. The Reveuue Account, Balance-sheet, and Statement of Business are appended. New Business and Amount of Business in Force. —New business for the year amounted to 5,912 policies, assuring the sum of £2,333,050, the premiums thereon being £44,953 per annum. Twenty-six annuities were also granted, the purchase-money being £20,464. The total business in force at the end of the year (including immediate, deferred, and contingent annuities for £96,188 per annum) comprises 92,177 policies, bearing an annual premium income of £775,518. The total sum assured is £30,848,799, to which reversionary bonuses amounting to £3,729,211 have been added. Income. —The total income amounted to £1,326,104, made up as follows : Premium income, £808,555 ; interest income (net), £497,085 ; annuity-purchase money, £20,464. The total for the year exceeded that for the previous year by £8,920. Outgoings.—During the year 1,728 policies became claims by the death of the policyholders and by maturity, the payment involved being £603,205. The total amount paid in claims since the inception of the Department amounts to £17,797,034. Accumulated Funds. —Assurance, Annuity, and Endowment Funds, apart from special reserves of £391,119, now stand at £11,417,522, an increase of £420,886 over the previous year. Investments. —On the 31st December, 1940, the total assets of the Department amounted to £11,891,195, and were invested as follows : — Class of Investment. Tota^Assets^ Mortgages of freehold property .. .. .. .. .. 42 • 7 Government securities, including rural advances bonds .. .. ..23-0 Local-body debentures .. .. .. .. .. ..16-8 Loans on policies .. .. .. .. .. .. ..10-2 Landed and house property .. .. .. .. .. .. 4-3 Miscellaneous assets .. .. .. .. .. .. .. 3-0

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Annual Bonus Distribution. —The usual bonus investigation was carried out by the Actuary, and his report, appended hereto, discloses a net surplus of £188,032 (excluding interim bonuses paid during the year) in respect of this year. Of this sum, £166,318 was allotted in the form of compound reversionary bonuses upon the sum assured and existing bonuses, the total reversionary bonuses thus allotted amounting to £277,196. Expense Ratios.—The ratio of expenses to (a) total income and (b) premium income for 1938, 1939, and 1940 is as follows : — Ratio of Expenses to 1938. 1939. 1940. (a) Total income .. .. .. .. 9-73 8-55 7-97 (b) Premium income .. .. .. 15-18 13-31 12-75 The expense ratios must be regarded as very satisfactory in view of prevailing conditions. 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 Insueance Department fob the Year ended 31st December, 1940. £ s. d. £ s. d. Amount of funds at Ist January, 1940 10,996,636 8 7 Death claims under assurance policies, Renewal premiums—Assurance, annu- including bonus additions .. 238,182 7 3 ity, and endowment, less reinsurance Endowment assurances matured, inpremiums .. .. .. 725,576 16 9 eluding bonus additions .. .. 348,860 6 0 New premiums (including instalments Endowments matured .. .. 15,369 6 0 of first year's premiums falling due Premiums returned on endowments .. 793 4 10 intheyear) less reinsurance premiums 45,098 16 8 Bonuses surrendered for cash .. 7,136 1 2 Single premiums—Assurance and en- Annuities .. .. .. 34,746 7 9 dowment .. .. .. 37,879 6 8 Surrenders .. .. .. 38,782 2 9 Consideration for annuities .. .. 20,464 5 4 Loans released by surrender .. 51,516 0 8 Interest, rent, and other £ s. d. £ s. d. income .. 507,548 9 1 Commission, new .. 34,579 2 6 Less property expenses 10,463 6 11 Commission, renewal 6,194 18 0 — 497,085 22 40,774 0 6 Contribution to Public Service Superannuation Fund .. .. 625 -4 2 Land and income tax .. .. 42,874 7 3 £ s. d. Expensos of management — Salaries .. 39,301 19 1 Extra clerical assistance . . .. 582 12 6 Medical fees and expenses .. 1,799 3 0 Travelling-expenses 1,068 110 Advertising .. 624 15 11 Printing and stationery .. 1,355 4 10 Rent .. .. 7,710 17 3 Postage and telegrams .. 2,799 17 2 Exchange .. 30 2 10 Audit fees .. 450 0 0 General expenses 4,775 1 0 Services rendered by Government Actuary .. 3,771 19 5 64,269 14 10 Property depreciation .. .. 6,289 17 2 Transfer to Investment Fluctuation Reserve Account . . .. 15,000 0 0 Amount of funds, 31st December, 1940 11,417,521 15 10 £12,322,740 16 2 £12,322,740 16 2 Balance-sheet of the Government Life Insurance Department on 31st December, 1940. Liabilities. £ s. d. Assets. £ s. d. Total assurance, annuity, and en- Loans on policies .. .. .. 1,217,965 2 5 dowment funds (as per Revenue New Zealand Government securities.. 2,730,304 0 0 Account) .. .. .. 11,417,521 15 10 Loans to local bodies .. .. 1,995,196 13 1 Claims admitted, proofs not yet Landed and house property .. 513,612 2 3 completed .. .. .. 59,632 8 10 Landed and house property (leasehold) 686 12 2 Annuities .. .. .. 397 19 4 Mortgages on property .. .. 5,074,924 14 0 Medical fees .. .. .. 212 2 0 Properties acquired by foreclosure .. 12,830 0 0 Premium and other deposits .. 18,151 1 1 Overdue premiums on £ s. d. Sundry creditors .. .. .. 2,094 5 0 policies in force .. 4,027 10 10 Accident and Fidelity Fund .. 5,000 0 0 Outstanding premiums Investment Fluctuation Reserve .. 386,118 17 0 due but not overdue 60,370 14 11 Sinking funds on local £ s. d. — 64,398 5 9 body loans .. 2,042 19 5 Overdue interest .. 5,394 3 5 Interest accrued thereon 23 13 11 Outstanding interest due but not overdue 8,525 14 0 2,066 13 4 Interest accrued but not due .. 105,866 11 9 119,786 9 2 Sundry debtors .. .. . . 1,205 11 2 Income-tax paid in advance .. 35,000 0 0 Office furniture and fittings .. 3,500 0 0 Cash in hand and on current account 121,785 12 5 £11,891,195 2 5 £11,891,195 2 5 W. E. Arnold, Commissioner. J. W. Macdonald, Secretary. Government Life Insurance Department, 14th March, 1941. 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. —Cyril G. Collins, Controller and Auditor-General.

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Statement of Business

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TOTAL. Whole-life and Term Assurances. YEAR 1940. —j— Annual 1 Annuities. 1, s um Annual ! Sum I Rever- j Premiums. j i. immediate or ! assured. ' i Premiums. No - j assured. ! L I. Ordinary. entered upon. °' ; 2. Deferred B 1. Ordinary. j | Bonuses. Extra. | «. Deferred. Annuity. | BonuseB ' j «. Extra. POLICIES ISSUED AND DISCONI i £ £ £ s. d. £ s. d. £ £ £ s. d. Policies in force at 81st 90,08129,787,3933,619,298 / 762,649 19 9 34,607 3 111 16,.669 7,2:60,430 557,683 (144,842 18 6 ) December, 1939 ( 1,801 1 663,051 10 l| 48,524 0 Op.a.J 1 714 10 11/ Mew business .. .. 5,938 2,333,050 .. ( 44,873 9 10 1,844 2 6 1 1,641 792,923 .. 111,392 3 5 1 1 79 7 8 526 12 0 j B 26 12 0 p.a. 1 25 16 8 | Bonus allotted .. .. .. 322,349 .. .. .. .. 51,944 Total.. .. 96,01932,120,4433,941,647 / 807,523 9 736,451 6 5 118,310 8,053,353 609,627 /156,235 1 111 | 1,880 9 2 63,577 2 If 49,04912 0 p.a- t 740 7 7f Polioies discontinued 3,842 .1,271,644 212,436 J 34,404 10 7 2,504 3 21 640 353,857 46,862 / 5,019 19 31 during 1940 ( —518 17 10 1,335 15 4 ) 1,188 0 0 p.a- 1 —120 10 2| Total polioies in force at 92,177 30,848,799 3,729,211 / 773,118 19 0 33,947 3 3 117,670 7,699,496 562,765 /151,215 2 81 , 31at December, 1940 | j 2,399 7 0 62,241 6 9 ) 47,861 12 0 p.a. t 860 17 9 J PARTICULARS OF POLICIES DISCON How discontinued. ( By Death .. .. 596 178,552 64,696 / 5,497 9 7 2,591 18 6] 262 84,359 38,603 / 2,260 12 8) 1 16 11 £ j I 7 10 8/ Maturity .. .. 1,132 276,288 85,590 / 11,126 15 11 | 11 15 10[ Surrender.. .. 1,007 328,266 40,138 / 8,811 0 10 1 170 79,957 5,084 / 1,170 6 10 1 1 20 8 9 456 0 0 ( 396 0 0 p.a. , | 6 15 10 f Change to other 24 11,912 230 / 132 4 4 i 15 9,362 34 / 57 19 4 Tables \ 5 0 0 144 0 0 J 144 0 0 p.a, 1 5 0 0 f Cancellation .. 146 41,902 109 / 1,071 13 1.. 11 3,725 26 f 73 17 2 1 1 10 4) \\ .. \ Lapse .. ... 937 434,724 21,373 / 7,765 7 8 -87 15 41 182 176,454 3,115' J 1,457 3 3 1 \ -57 4 4 2 735 1 5 4 ) 648 0 0 p.a. | -139 16 8 / Total discontinued during 3,842 1,271,644 212,436 / 34,404 10 7 2,504 3 2 l 640 353,857 46,862|j 5,019 19 3 1 year 1940 | ( -518 17 10 1,335 15 4f [i.188 0 0 p.a. \ _i 2 0 10 2 f ] i . I . _ I PROGRESS OF BUSINESS OF THE GOVERNMENT LIFE INSURANCE Total issued .. .. 270,293 79,382,444 9,551,161 f 2,2 ® 3 n - 4 [ 221,271 14 064,742 23,437,306 2,719,218 12 1 41,4811o 2 1 65,785 12 Op.a. I 19 ' 050 1 10 l Total void .. .. 178,116 48,533,645 5,821,950 8 } 125 > 088 4 0 47,072 15,737,810 2,156,453 4 1} Total in force .. 92,177 30,848,799 3,729,211 773,118 19 0 96,188 10 0 17,670 7,699,496 562,765 151,215 2 8 47,861 12 0 p.a. Extra Premiums .. .. .. 2,399 7 0.. .. ■ j 860 17 9 L £775,518 6 0 £152,076 0 6 Note.—The " ordinary " premium is the premium charged

EL.—B.

t End of Year 1940.

W. E. Aknold, Commissioner. S. Bbckingsalb, P.I.A., Actuary.

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ASSURANCES. SIMPLE ANNUITIES. ENDOWMENTS, Endowment Assurances. Annuity Assurances. INVESTMENTS, ETC. 1 Sum Annual !• Annuities. Annuities. Sum Annua] assured. I Premiums. , J. Immediate or Annual N Annual j. immediate or N a aa |"* e £ Premiums - 2. Deferred! 1■ Ordinary. I "iinnJvv entered, upon. Premiums. Premiums. entered upon. ' ninnnrv 1 - Ordinary. Annuity. | lionuses - a. Extra. \ Bonuses. i* D °f<>r™d, 2. Deferred. Bouses. g Extra ' TUED DURING THE YEAR 1940. £ £ £ s. d. £ £ s. d. £ s. d. £ 9. d. £ s. d. £ £ s, d. 18,583,026 3,038,701 (578,433 16 9) 18 1 j 4,697 717 15 2 1 81 3 0 571 35 15 6(33,889 8 9 17,596(3,939,240 39,256 6 01 12,726 p.a. ( 1,058 9 10 J || 1,085 447 4 1 f | 1,354 6 Of * ( 21,829 28 0 9) 901.135 .. J 27,508 15 8| .. j .. .. .. 26 .. ( 1,844 2 6 } 1,028 638,992 15,972 10 9l t 51 2 3j' i | .. J 1 2 8 9) 268,143 .. .. I 72 .. .. .. .. .. .. 2,190 19,484,161 3,306,844 (605,942 12 5) 18 j 4,697 717 15 2 1 81 S 0 597 35 15 6/ 35,733 11 3 1 8.624 (4,578,232 45,228 16 ol 12,726 p.a. II 1,109 12 If M 1,157 447 4 If | 1,354 6 0 J \ 24,019 30 9 6) 759,662 161,478! I 26,768 1 7) 1! ( 550 .. 127 10 0 37 21 15 6J 2,504 3 2) 378 j 157,575 2,567 4 3} I -393 12 8 J | 247 87 15 4 j | 60 0 0 ( \ 3,849 -4 15 Of 18,724,499 3,145,366 (579,174 10 101 ! 17'j 4,147 717 15 2 1 53 13 0 560 14 0 0 ( 33,229 8 1 1 8,246 (4,420,657 42,661 12 6> 12,726 p.a. I 1,503 4 9) | 910 359 8 9 f ( 1,294 6 Of ( 20,170 35 4 6/ TOED DURING THE YEAR 1940. 87,993 26,093 ( 3,164 7 41 .. .. .. .. 37 .. J ,591 18 6 ) 11 ( 6,200 72 9 7 } 1 9 0 9} 264.136 82,240 j 10,593 14 1) ..(..) .. .. .. .. .. 71 I 12,152 533 1 0) ( 11 15 10) 1 246 I | 3,104 .. ) 193,354 35,353 1 6,591 6 61 .. j .. 1 .. .. 1 21 15 6 j .. | 140 | 54,955 1,027 12 Of I 13 12 11J j 1 j \ 60 0 0 J | .. j 2,450 196 j 70 0 oj .. .. .. .. .. .. .. 1 ( 100 4 5 0) 32,459 83 ( 838 8 5| .. .. .. .. .. .. .. 10 f 5,718 159 7 6) 1 1 10 4) )....) 179,270 17,513 ( 5,510 5 3| 1( 550 .. 1 27 10 0 -1 .. j -87 15 4 1 145 j 78,450 770 9 2) j -429 12 6 f t .. 87 15 4 J I j | 745 —4 15 0 j 759,662 161,478 (26,768 1 71 1 550 .. I 27 10 0 37 21 15 6 ( 2,504 3 2 1378 1157,575 2,567 4 31 ( -393 12 8 f ! I 247 87 15 4 J \ 60 0 0 f j 3,849 -4 15 0J PARTMENT SINCE DATE OF ESTABLISHMENT TO 31st DECEMBER, 1940. 5 4^',428'ies 7 6 .765,457j{ L ' 6 22,'375 7 1,131 | 17 g | } 60,175 1 10 9 ,387 16 91,652 888 2 2 90,882 4 2 16256 { 85 ' 9 gg 1 g °| p.a. j ] 30,775,118 .j /»,/% «q-j f 1,035,398 13 2] f 175,053 ) en aq7 17 11 q qqa q 01 nQ9 S74. 9 9 in 1 ft nin f 1*845,664 43,306 19 6) 1702 16s.p.a ' 1 j 20,872 2 4) 1)114 { 8,642 } 59 ' 097 17 11 J > 334 3 J1 < 092 874 2 2 56,358 10 1 8,010, j ' 46 ; 764 ' 2 l 1 9} : 18,724,4993,145,366 579,174 10 10 17 { 4 3 11 53 13 0 560 14 0 0 34,523 14 1 8,246'j } 42,661 12 6 12,720 p.a. ! I - ~ 1 < 503 4 9 " - - - seT^e £580,677 15 7 £53 13 0 £14 0 0 £42,696 17 0 - I ——— rue age: the " extra " the additional premium charged for any reason whatsoever. W. E. Aknold, Commissioner. S. Beokingsale, P.I.A., Actuary.

H.—8.

ACTUARY'S REPORT ON THE VALUATION OF THE GOVERNMENT INSURANCE DEPARTMENT AS AT 31st DECEMBER, 1940.

Presented to both Houses of the General Assembly pursuant to Section 40 of the Government Life Insurance Act, 1908.

Wellington, 10th April, 1941. In accordance with your instructions, a valuation of the Department's liabilities under its policies has been made as at 31st December, 1940, 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 92,177 policies assuring, inclusive of bonus additions, the sum of £34,578,010 and £96,188 immediate and deferred annuities per annum ; the Office premiums thereon amounting to £775,518 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 Q M mortality table with 3 per cent, interest. (d) Annuities : The a (m) and a (/) 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 were included for future bonuses, immediate payment of claims, and other contingencies, including those likely to arise out of the present war. The valuation disclosed a total surplus of £191,931, as follows : — £ Total funds at 31st December, 1940 .. .. .. .. 11,417,522 Less value of liabilities .. .. .. .. 11,229,490 Net surplus .. .. .. .. .. 188,032 Interim bonus paid during year .. .. .. . . .. 3,899 Total surplus .. .. .. .. .. £191,931 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. Per Cent.. Whole-life assurances, and long-term endowment assurances maturing at £ s . d. ages 80 and over .. .. .. .. .. ..150 Other endowment assurances .. .. .. .. ..110 Double endowment assurances .. .. .. .. 0 17 0 Pure endowments .. .. .. . . . . 0 15 0 Policies issued under Premium Tables which have been closed. Whole-life and endowment assurances .. .. . . ..110 Double endowments .. . . .. .. .. ..100 The above bonuses will absorb the sum of £166,318, and I recommend that the balance of the net surplus —viz., £21,714 —be carried forward. S. Beckingsale, Actuary. The Government Insurance Commissioner, Wellington.

Approximate Cost of Paper.—Preparation, not given ; printing (1,260 copies), £17 10s.

By Authority: E. Y. Paul, Government Printer, Wellington. —1941.

Price 6'rf.]

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