H.—9

FOURTH SCHEDULE. Statement respecting the Valuation of the Liabilities under Life Policies and Annuities of the Government Insurance Department. Question I.—The date up to which the valuation is made. Answer. —The 31st of December, 1890. Question 2. —The principles on which the valuation and distribution of profits among the policyholders are made. Answer. — (a.) The Principles adopted in the Valuation. —-The valuation has been strictly a " net premium valuation " at true age, with adequate extra reserves for limited-premium policies and prompt payment of claims. No extra premiums or loadings whatever have been treated as an asset in the valuation. Valuation of Ordinary Whole-life Assurances, comprising 63 per cent, of the total sum assured. It being found that the total premium income of the office fell due on the average about six months and one week from the date of valuation, the addition of k was made to the annuity in the valuation formula. The pure premium valued was the yearly premium, or equivalent annual premium where the policy was renewable more often than once a year, for an assurance payable at the moment of death. The reversion used for valuing the sums assured and bonuses was the reversion payable at the moment of death. The valuation formula was therefore— A — P (-5 +fl ). x+n x v re +ra 7 The valuation age, x+ n, was obtained by deducting the year of birth from the year of valuation, and adding half a year. The entry age, x, is the true age at entry. Negative values amounting to £86 only were discovered in the detailed valuation, and these were struck out. The ordinary class valuation by the method of year-of-birth groupings resulted in a net liability of £654,927, whilst the detailed valuation gave a net liability of £651,953; the difference being only £26. The following table shows the amount reserved on ordinary whole-life policies payable by whole-life premiums for every £100 of sum assured :—

TABLE I.—ORDINARY WHOLE-LIFE.—SPECIMEN RESERVES.

11

tea Duration of Policy. CDC <!W J Year. 1£Tears. % Years. 3J Years. 4J Years. 5A Years. 6} Years. 7J Years. 8J Tears. 9J Tears. 104 Tears. 15} Years. 20| Years. 15 20 25 30 35 40 45 50 55 60 65 70 75 0-942 0-979 1-154 i'353 1-605 1-934 2-367 2-885 3-592 4-478 5-582 7-227 9-052 1-766 1-652 2-015 2-357 2-822 3-420 4-193 5-073 6-242 7-607 9-I9I 11-575 I3-495 2-574 2-331 2-903 3-392 4-063 4-960 6-046 7-310 8-918 10-716 12-803 15-783 17-829 3-341 3-042 3-808 4H56 5-336 6-549 7-924 9-585 II-6I2 13-806 16-445 19-798 22-064 4-050 3795 473° 5-555 6-640 8-179 9-834 11-892 14-327 16-877 2o-ogi 23*602 26-222 4-718 4-592 5-669 6-682 7-986 9-844 11-780 14-227 17-040 19-932 23-725 27-263 5-365 5-423 6-629 7-836 9-380 11-530 13-768 16-585 19-757 22-993 27-298 30-817 6-020 6-281 7-618 9-014 10-826 13-240 15-800 18-965 22-457 26-056 30-759 34-283 6-702 7'i54 8-637 I0'22I 12-316 14-975 17-867 21-363 25-141 29-144 34-060 37-671 7-428 8-044 9-687 11-459 13-846 16-739 19-963 23-779 27-808 32-237 .37-188 40-996 8-194 8-949 10-765 12-735 i5-4 0 7 iS-537 22-084 26-193 30-463 35-3I7 40-197 12-387 13-869 16-552 I9-773 23-565 28-053 32-954 3 8 -i35 43-825 49-287 17-121 I9-454 23-284 27-509 32-493 38-089 43-802 50-023 55-957 15 20 25 3° 35 40 45 50 55 60 65 70 75