Worcester daily spy. [volume] (Worcester [Mass.]) 1850-1888, 1859-12-02

The loading being according to their admission
$40! per cent is obvious that deduction of 1858 per
cent from the premiums will reproduce the original
premiums and Il the commissioners had understood their
own principle this all they should have deducted from
the present gross value of the future premiums payable
under the policies II we refer to the last column
of Table A. shall find that the difference between 80
per and 1888 per the gross value of the pre-
miums is no less than eS4 7l9. This large amount Of
on society in direct violation of their princi
pies and the reputation and credit of the institution
made to suffer by blunder which any ordinary clerk
would have been careful to avoid After the disclosure
OF the preceding to the amount of 4 9 in the
first item only Of their valuation given in page of the
report you may perhaps, consider unnecessary that
ther, and that should proceed at with my own
valuation of the assets and liabilities of Society 1t
IS however, important to aude to one or two other ques
1t stated in page that ''the further probable prem
ums discounted at per cent with proper allowance
for future and contingencies, will be insufficient
all the payments near and various CON
tracts This raises the important question. What is
proper amount of allowance for expenses and the
to decide upon should it be decision of
those actually entrusted with the practical management
of your affairs, and whose and property
sponsble for the ulment of the socetys engaeements
As already stated, the commissioners have taken the mat
Ter INTO their own hands and deducted margin for future
expenses which equivalent to loading on the original
premiums OF 40 % cent This is proceeding which,
believe it impossible get any authority in the king
dom to sanction and is besides alarger ratio than they
IN view that the valuation relates to acquired business
only and does not in any way affect the new or future
ofthe expense annually incurred by life Office is
stoned by nursing the already acquired business.
There is an excellent practical illustration of the expense
actually necessary to continue an existing business in
the of the various Indian funds the pensions of
which paid in England to the extent of nearly half
million sterling yearly. To supernend the payment of
these pensions there needed much greater amount of
time care and attention than for the colec
non Of renewal premiums by life office and yet the
London agents OF these funds content to do all that Is
required for an allowance Of per cent on the dsbuIse
nen Beyond its expenses at headquarters life office
mas Oh course also 10 meet the commission on such OF the
renewals through the hands oagents but making
all it is impossible to make the tax for expens-
es on the future premiums very high and reaching
at all near that practically assigned to it by the commits
tDnir fin nj hndu
ton as that made from the present value of future prem
ums for expenses would be of gross injustice
existing policy holders and have the effect admitting
future entrants into the society easier than their
predecessors, The admission of new assurers into all
companies costs more than the margin on their first
year premium and must be therefore repaid out Of the
margin on future premiums.
The commissioners apparently wished in their calcula
tons to determine the value the premiums al
though they have not succeeded i'll doing Let us,
however consider whether valuation of premiums
is really that which in justice required, or which
sanctioned by practice Calculations intended fol the
public security do not require to be made in the anay
cal forms which may be needed for the regulations of
many of the internal affairs of company but still it is
well known that many of weathest, largest. and
undoubtedly best established Offices even for the adjust
ment of their interests among the members them
selves as well as with the public have always valued the
tal me whole OF the premium is as completely and as
entirely the property Of the Society part of it, and
the other few years ago papers read
before the Institute of Actuares by of its leading
being the correct proceeding, and that any
other is merely dealing with fiction and not with facts
1t is quite that for purposes of Life Office
there are also Acuaries VINO employ net premiums when
they called upon adjust past transactions
assigning bonus for example, which may have accrued
from the profits of former years. but the commissioners
figures avowedly deal with the future alone. have
before reports by those leading Actuaries of the
day who are in the largest practice in all of which the
gross premiums are valued and treated as contingent
assets The commissioners not, therefore, safe in
assuming matter of that their valuation
be justly, and with the Uniform sanction of authority
made on the new premiums oqly.
While on this part of the subject it be well to
Teier TO question OF great practical Importance to
Life Office and which, in most material degree, affects
the prosperity and success of the best conducted
panies, and that profit derived from apsed and dis
contm9ed policies This question is fully treated imp
shown that in the principal London offices reported
by the Committee of Actuaries the amount of premiums
other causes than by death, equal to sixtyne per
cent OF the Whole sums paid for claims by death in the
Offices. Some the modern Offices paid
the whole their death claims, arising dozen
period the '''''p ''Se' p0's' "i'DH inc same
1t is obvious that the sixtv-nine per cent Just mention
ed is not all profit to company; still those practically
acquainted with uChmattcrs fully of its form
ing very important source of gain, and is of the
causes Of the large dividends and bonuses paid by
With so much confidence may this of gain be
lied on, that one of the highest authorities in such
tiers has recently felt hmset JUSTIFIED in advising of
the most ourshing offices OF the day that they may fair
constantly accrng yearly increment,a certain ratio
Of the receipts from lases determined by the expert
have offered these observations respect to lapses
the most fitting reply to the very used
by the commissioners. IN page of their report:
shall hasten to submit to your consideration the
of your society the Both OF November last and in
doing so will append the calculations themselves,
that the process by which the results obtained
ully undestood and the afforded of checking any
of the steps in DETAIL in order to thoroughly satisfy your
selves ana others OF the sucency of all the conclusions
arrived at.
In making these calculations have adopted table of
mortality which believe to be better exponent of the
mortality to which the society will be subject than any
other, namely the rate of mortality experienced by
male lives in England and Wales, and gwen pp 20 of
Cont. Wit. Stat
This table has the additional accommodation of
Stimulating closely with that from which, understand,
the premiums in by society have been deduced
as well as by which your valuations time
to time made, namely, adjustment of the Carlisle TIA
BILE to avoid the well known Irregularities which
the curve of that table is marked.
The rate of interest employed throughout the whole of
the calculations is per cent.
The calculations given in tables l. to X inclusive
and the following is condensed summary the results