H.—l2

ACTUARIES' REPORT.

By the Act of 1884, the powers of the Association with regard to investments were enlarged, with the object of placing the funds to the best advantage; but, on the other hand, there is a tendency for the rate of interest to become equalized throughout the world, and, consequently, to fall in New Zealand. Giving due weight to all the circumstances, we are of opinion that, on the present occasion, it may fairly be assumed that a rate of £4 10s. per cent, per annum will continue to be realized in New Zealand. As stated in paragraph 15, we, however, recommend that a further reserve be made, so that, if thought expedient, the assumed rate of interest may be reduced at future valuations. 14. In the valuation, provision has been made for the immediate payment of claims. For the half-yearly, quarterly, and monthly cases, the true corresponding net premiums have been adopted; and, in all cases, the full loading has been reserved for future expenses and profits, with the proper additional reserve in respect of those policies where the premiums are payable for a limited period only. 15. By employing the true half-yearly, quarterly, and monthly net premiums, instead of the equivalent annual premiums, the estimated liability has, on the present occasion, been somewhat reduced, and the surplus, to an equal extent, increased ; but, we do not think that this portion of the surplus should be divided. The additional premiums paid in respect of policies on under-average lives, and the debts charged against other similar policies, have been, so far as we can judge, more than sufficient to meet the extra mortality already experienced; but, we think that the surplus from this source should, for the present, be reserved. It is possible that the extra mortality may be only deferred, and we think it will be prudent to retain a fund in hand to meet such a contingency. As already remarked in paragraph 13, we think provision should be made for reducing, if deemed expedient, the assumed rate of interest of future valuations. For these, amongst other, reasons, we have recommended in paragraph 7, that the ascertained surplus of £245,315 should not all be divided, but that £95,315 should be reserved. If our recommendation be adopted, the effect will be to place the Association in the position of having made a netpremium valuation at 4 per cent, interest, and of having set aside an additional reserve for under-average lives. 16. In the Appendix, will be found a tabular statement detailing the contracts as valued, and the results of the valuatior.. (See pages 24 and 25.) Industrial Branch. 17. On the 31st December, 1885, there were in force in this branch 4,193 policies for assurances, amounting to .£59,514 145., and yielding in premiums £2,732 16s. 4d. per annum. The average amount assured by each policy is £14 4s. ; the average weekly premium being threepence. Sixty-five per cent, of the policies are on the lives of children. The amount of the fund is £2,058. We have made a valuation of the liabilities, and are satisfied that, while the fund is sufficient, there is no surplus available for division in this branch; and, as we learn from Mr. Luckie's memorandum that the branch is to be closed without delay, any further discussion seems unnecessary. We are, Sir, Your obedient servants, ARTHUR H. BAILEY. RALPH P. HARDY. GEORGE KING. The Hon. the Colonial Secretary.

3—H. 12.

17