, 1874-09-08

| H@Ako hulEu ]tlVy arc how 30
often forced to fill, and actors mud managers
ai'ko would gladly hail any decided movement
for the creator dignity Of thoir profession.
PRINCIPLES OF LHE-1NsunANoE,
In l87o the English Parliament pasBed an act
requiring tho insurance companies doing bus,-
ncss III England to submit accounts and etate
monts At specified timcB to tho Board Of 1,roJe.
ono hundred mud twenty-five compauies-all Of
them Britlsh-haVo, III pursuance OF that net.
submitted to tho Board revonue accounts and
balanco-sheots. Messrs. Malcolm md Hamilton,
Assistant Secretaries to tho Board, have drawn
up report on life insurance which Ia Of un-
usual interest both to lifo-insurauco companies
and to rho general public. A person dosirous
or lnauripg his lifo need be no longer puzzled
what company ho should choose; he mood not
depend on tho advico Of frionde, nor on tho pros-
poctusos Of the companies themselves; nor base
Lii selection on tho amount Of business
transacted or tho dividends declared.
His aim should DO to choose a oom-
pany that docs business on correct pripciploa.
aud what those arc Messrs. Malcolm aud Hamit.
ton "ll inform him. As thcse gentlomon Say,
tho Afe-lnsurance business il founded On tho
fact thas, "though thero arc few things 60 un-
certain rs tho duration OF the lfo Of ono indi-
vldual, observation has proved that tho duration
OF the collective life Of largo number is practi-
cally certain" The longer livors supply By
their more humorous payments tho balapco
Which Is to be paid over and above the shorter
lvers. Once started, an insurance company
conducted On true principles neols no largo capi-
tal mad oil the money It moods at tho beginning
is enough to enable it to pay exponBes until Its
business Increases and to moet tho losses couso.
quont On tho death Of those who hayo insured
with 1t. Whom established. tho iuterost on tho
promiums should bo sufficient to dofray the ex-
ponsca and supply tho 1neans Of paying tho
policies. The safety of IN Insurance company,
granting TINT it's Investments aro iudiciouu, de-
ponds on three things:
/. Tho rats Of mortality employed by 1t in
granting tho policies.
2. The rato Of interest at which It estimates
tho proceeds OF its Investments.
8. Tho proportion OF tho premiums which It
resorvea for future expenses aud profits.
premium consists Of two parts,-tho not or
riak premium, uE tho amount which, invested at
interest, will just meet tho policy and tho
'loading," or tho amount sot apart for expenses
and profit. There arc two rates of mortality
Tho true and hypothetical. Tho true were
originally constructed TO represent actual NOR
tallty, and havo boon found by experience to
answer their purpose moro or leBs faithfully"
Tho hypothetical are those in which tho rates |
Ire oithor known to be or aro malo fotitlously |
heavy. Actuaries aro divided as to which of |
hose tables ia to DO preforrod In prac-
lice. The true tables, so-callcd, dit1er among
themselves; and tho MesB1s Malcolm, aud Harn- |
lton say that "thc substitution Of ono mortality
ablo for another may causo variation in tic |
csulting liability Of 10 per ccnt." It ia Of tho ]
Utmost Importance that company should USE
ablos showing the actual ratio OF mortality in
ho classes which tho company insurea. Next to
ho employment Of correct tablcs tho liabilities
md solvonoy OF an insurance company will de-
'ond on tho rnto Of interest which 1t calculator to
oceivo from tho Investment Of ita promuma.
Tue report says that on the average tho ratio Of
interest made by the oiiices docs not reach 41
'or cent, but tho Board Of Trade are Of
pinton TINT 1t III not safe to cal
ulato On moro thun per cent. A
CRY important part Of tho report ia that which
toats OF the proportion Of tho income reserved
y tho company for the payment Of tho policioa
8 they fall due. a given premium iB resolved
ito tho following parts: /. Not premium, tho
art put aside to cover claima. 2. Commission
} agenta. Q. Working oxpenaea. 4. Profit.
gents commissions never como into tho han,1a
the companies, and caunot therefore be in-
uaed by thom III aaHots. For aomewhat slm-
Or rcaaon tho working expenses cannot bo in-
uded In aaHots. OF tho profit tho report says:
II they (the companies) take credit In their |
slnation for any portion Of this amount (the
'odts) they necessarily confer undue benefits
pon present monhers to the injury of now /
onoorn, and tho process resembles that Of g {
'ondthFnt anticipating for proaent use tho H.
mo to DO dosiycd In future years from sottled ,,
tato.7 Tho not premium. therefore. n1ono :.
II DO included In the aaseta. Yet In spite OF =
Is. many OF tho Engllsl, companies hive sub G
'stea valuations in which future profits, future q
ponaea, aud eycn future commissions have 9
On represented as assets. How rook!esa}y !.
me- OF the companies are conducted 1usy be b
Eesssd from ths soloning atatensut Of tho bQ