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

cpal upon which the estimate of your property
pends and which the basis for the future prosperity of
Ro oRE l'u'i0n anu lot s commence Oh your p0i'y
NV results conceded notably with those ofthe London ac
tuares and fully confirm Mr. Nelson's estimate that the
present surplus of the of the society,"
abilities is at least one hundred and thirty thousand
pounds sterling sl359S So it would not be unreas
enable by adopting higher rate of Interest, bnt
ciety to augment this estimated surplus to much
one hundred and eighty thousand pounds sterling.
Presumng that the opposition to Mr. Nelson's estimate
will be limited to discussion Of the mathematical prn
ciples which undere it and that there will be cotro
yersy as to the numerical accuracy OF his computations
have satisfied myself with investigating the principal
SON table of mortality, derived from the Registrar Cen
Wales and which is contained on pages and of Nei-
sons contributions to Vital Statistics" From this
which have subsequently used in the accompanying
table for obtaining the present value of the liabilities
upon the policies, and that of the annual premiums
The computation has been made upon the assumption
cent and the other five per cent. per With the
rate of per cent, 1 have obtained the following
values;-
The present worth of the sums assured, Al.
The present worth Of the annual premumsis 927O5 Is
The present worth of the assuredis ES9924 S3+
The preset worth OF the annual premiumsis 9270I
*NoTE-Table contains detailed comparison of
these two computations.
The present worth of the sums assureds s763l64 "a
Inc present worth of the annual premiums S2354l So
This latter result nearly e4 900 better the socie
ty, than that which is given by adopting the
per cent which confirms the statements of Messr Wool
house and Nelson. 1t is not for the mathematician to
decide between the relative propety these two rates
OF interest," but it is evident that either of them places
the Society far above all reasonable apprehension as 10
Its stability,
The Massachusetts commissioners have arrived at an
adverse conclusion which, without impugning its hon
esty must be regarded directly opposed established
experience and the sound deductions of science The
un9gnned snuatons against respectable Institution
ana honored men are much regretted, but will not
comment upon them will pass over the smaller errors
tions of the Combined Experience tables, the
points have been ably and hoPo2ghy discussed BY Mr.
Nelson whose averments carry conviction to all unpreju
cced minds will restrict myself TO the consideration
of the mode in which the commissioners have dealt with
the report OF your Society," and direct your attention to
posed as correct reconstruction your balance sheet
the present value of your future income dervabe from
ties on account of the assured there admitted
70 De correct precisely as you have given them This
because 1t Is unntenOna that the principles of your
computations are sound 1t is radically inconsistent
with the estimate of the your policies,
IS gwen by the commissioners page and which they
have unjustly adopted throughout their argument as
if in any proper of the phrase the real and
actual net value of your policies.
ihere no room here for mere opinion in this matters
Is simple case for the application of strict mathema
cal principle The standard of value adopted by the
yield to the actual facts they embodied in the
baTe 5mte p & B0r vaqfs the
they nave endeavored to avoid the contradiction of
themselves in which would involve them, by the adrot
introduction OF an additional llacy They have assumed
the present value of the future expenses of the society
burden OF this expense upon the present policies The
mere statement of this unwarranted procedure should be
its certain condemnation.
nat million ofdOllars, in addition to the reQur
ed TO meet probable losses and in addition to the paid
up capital would be absorbed in the of collect
ing the annual premiums and paying out the terminated
rsks OF about five millions of dollars of actual Insurance.
Inc commissioners cannot intend this strange PROPOSE
tlon ~ must be a momentary careessness in which
they VIII not perseyere. They must know that good
hnancier would gladly undertake the whole expense of
such transaction for one fourth of this sum, which is
however, less than the amount actually reserved by your
society for this purpose.
Had million of dollars beGN reserved in accordance
wlt the opinions of the commissioners, what there
TO be done with the surplus of three-Quarters of mil
non! Is 1t intended to meet expected lOsses They
fully provldedorn the expected premiums and the prev
Gus investments Is it for peced losses They
covered by the guarantee capital and ii such
losses are within the legitimate bounds of probability
would not seem to be wise i'll the commissioners sug
Eest the eXpedency of giving up this capital Where
the Is the use of this vast surplus except it be for pro-
nj! Ii TINS be so, why not consider it to be profit
once and divide it accordingly? Such has been tho mode
of protecting which your Society has fit adopt
and you are fully justified in decision by the ma
ematca principles which the recognized foundation
OF the business of Life Assurance.
remain, gentlemen very respectfully,
Your oDedient servant,
BENJAMIN PIERCE,
Perkins Professor of Astronomy and Mathematics in
Harvard College.
Cambridge, Mass, Nov. 49, 1859.