Image TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage Tile
Image size: 6656x8192 Scale: 35% - PanoJS3
Page overview thumbnail

Article text

[ADVERTISEMENT.]
Australian Bffataal Provident
Society.
From the Argus, of l9tA October, 1874.
ABOUT twelve months ago we took
pains to analyse and explain certain
proposals made by the directors of the Aus
tralian Mutual Provident Society to the
policy-holders. These proposals were of a
prudent and conservative character.* The
society's actuary, Mr. Mokrice Black.
upon investigating its affairs, arrived at
the conclusion that the bonus ^*gt'^*nt^ffn
was unfairly favorable to the other policy
holders and correspondingly unjust to
those joining later. He disapproved of
the Carlisle table, and urged other alter
ations. In order to be quite sure, the
directors sent Mr. Black to England to
submit the society's affairs to the highest
actuarial drill in the world, and to take
advice thereon. After many months of
patient investigation, a number of tbe
leading English actuaries agreed upon
certain recommendations. These were
submitted to the members, and they,
although the changes involved personal
sacrifice in some instances, finally adopted
them.
The outcome of the fifth quinquennial
investigation conducted under the new
regulations has just been placed in the
hands of Victoria members of the society,
and the results are such as could hardly
be surpassed by any life company in the
world. On 31st December last 17,511
policies were in force, assuring seven
millions sterling,, and the «nrmf»l premium
revenue was a quarter of a million. In
the last five years these three items have
nearly doubled. Mr. Mobkice Black is
certainly the most candid of actuaries.
Not only does he conform to every require
ment of the English Life Assurance Act,
but be tells more than the law asks him
to telL There is really no question which
could arise about the society's affairs which
is not anticipated in the quinquennial 50
page report which he submits. Not only
are the great totals marshalled in imposing
array, but every item is dissected, and the
inner working of tile society is shown as
distinctly as the mechanism of a skeleton
deck under a glass shade. The income
and outgo of each year of tbe quarter
century the society has been in existence
are given.
The report is a model document, which,
if generally followed, would render legis
lation upon the. subject- of -life.- assurance
almost superfluous. Some of its leading
characteristics are deserving of especial
notice, and show distinctly' bow great
results may grow from humble beginnings,
if prudence and economy be observed.
The total income of the Australian Mutual
Qfpvideat Society during 25 years has
been £2,229,099 ; it has paid to members
and their representatives £617,400; its
expenses of management have been
£276,600, or 12|r percent on total income;
its losses by investments, including
furniture depreciation, have only been
£19,111 ; of, die total premiums received
after paying the large snot above mentioned
there remains 7$ per. cent securely
invested. At -the qninquenninm, in 1869,
£97,333. was divided amongst 6,53? mem
bers—on Hiis occasion there is £235,185
to distribute' amongst 16,035 members.
This latter sum is equal to a reversionary
bonus of £634,744, an extraordinary re
sult Ear a -purely colonial office. And on
this occasion, under tbe the new bye-lawe,
the division will be equitably made as
between the old and the new members of
die society. And here there is evidence of
how fully alive the management is to its
enormous responsibilities — enormous con
sidering the amount and the character of
the interests involved. The directors have
discarded the use of the Carlisle table
(still considered safe enough by many of
die great English companies), and have
adopted instead a mortality table based
upon tbe experience of assured lives, and
not on the lives of the general population.
By using the new table much larger
reserves are required. Thus, for example,
if the present valuation of the Australian
Mutual Provident Society had been made
by the Carlisle table, as heretofore, die
surplus or profit would have been £402.899
if»Rta-aJ of £259,899, as valued. Nothing
could more vividly illustrate the strength
imparted to the society by the altered bye
laws.
Another important point, and one which
suggests unpleasant comparisons with
some life assurance balance-sheets lately
published, is this : Premium, as experts
know, is made up of two parts — one the
'net' or 'pure premium,' being the
actual amount required if the business
could be managed without expense ; the
other called ' loading' which is added to
provide working expense. The two
together make die gross or ' office ' pre
mium. Now, if the expenses of an office
exceed the loading, it is obvious what die
fateofdiat institution must be. In the
rcport before -us thty«e much less. The
loading ranges 22 to 88 per cent., accord
ing to the nature of the policy. The
annual income therefore is £58,455. and
the excess over expenses last year was
£20.000. But no profit to arise from this
source is anticipated : in valuing the
assets, die net premium only bas been
considered. This, leaving die loading out
of die accounts, is like adding farther to
the reserves. So ample are these, that
die . actuary reports — ' Large as die
' bonuses are, it would have been unfair
' to die present members to have made
' larger reserves.' We observe that the
expenses during the quinquennium have
been only 15 per cent, on the premiums,
which includes the costly reference to
English actuaries, and of course heavy
new business runs this item up. The rate
of interest realised from the society's
investments is £5 6s. 8d. per cent., thus
comparing favorably with die great
British Mutual office-die Scottish Widows',
whose investments produce £4 2s. per
cent The comparative statement of
income from investments shows a decline,
arising from the society having less money
out on martgage and more iu Government
securities. Perhaps die most surprising
feature in the report we have been dis
cussing is die comparison of die new
business with that of die leading English
companies. It distances them all in die
number of new policies issued ; in amount
thereby assured it is only surpassed, aud
not much surpassed, by die Gresham, die
Scottish Widows', and die Standard. In
corresponding yearly premiums it is headed
by die Gresham aloue. To have won
such a position as 'his is an achievement
of which die directors of die Australian
Mutual Provident Society may well feel
proud. Nor need it be die least cause of
self-gratulation to conjure np the images
of penury and suffering averted by die
simple statement, ' total amount assured,
seven millions.'
$