Hcvicw of Revicus, 1/3/13. 



FINANCIAL AND BUSINESS QUARTER. 



CONDUCTED BY ALEX. JOBSON, ATA. 



THE NATIONAL MUTUAL LIFE ASSOCIATION OF 



AUSTRALASIA LIMITED. 



The average policy-holder, when read- 

 ing the latest report of the Life Office 

 in which he is assured, is naturally 

 prone to attach too much importance to 

 the volume of new policies it records. 

 That feature in a report, though inter- 

 esting, is really worth much less notice 

 than the movement of the expense ratio, 

 whose fluctuations largely govern the 

 bonuses the policyholder is likely to get. 

 In the case of the National Mutual Life, 

 for instance, many members have no 

 doubt been much impressed with the in- 

 crease of over ;{i^ 1 50,000 in the new busi- 

 ness, to ;£'3, 593,000, in the September 

 191 2 year. But that is not nearly so 

 satisfactory as the reduction in the ratio 

 of expenses to premium income by i^ 

 per cent, to 1894 per cent. This means 

 that, had the expenses in 191 2 been at 

 the 191 1 ratio, the society would have 

 spent ^,^1 3,800 more than it did. The re- 

 duction, too, IS gratifying, because in the 

 face of it, the new premiums did not 

 fall, but on the contrary, rose, by over 



i:43oo to /: 1 20,500. 



This is now the second year in suc- 

 cession that the expense ratio has been 

 lowered, but it will have to be reduced 

 still further before the society can show 

 as low a figure as that of either of the 

 other two large Australian offices. The 

 Directors are, no doubt, striving to at- 

 tain to such an end. They will pro- 

 bably get it in time, but it will be a 

 long time, unless the volume of new 

 business gives pride of place to the 

 question of expense. The new business, 

 in such an event, would no doubt fall 

 away, but only for a time, for, with a 

 really low expense rate the society's 

 profits would so increase, and bonuses 



so materially improve, that the pursuit 

 of new business at a reasonable cost 

 would be a much less difficult matter. 



* * * 



This point is important, for the power 

 of the society to hold the business it 

 gets, did not improve in 191 2. In the 

 previous period the renewal premium 

 income increased by over 53 per cent, of 

 the new premiums obtained in '910, 

 whereas last year the growth was barely 

 47 per cent. The latter increase is not 

 at all a bad one, still, it is over 6 per 

 cent, below that of 191 1. This may be 

 only a temporary set-back, yet its occur- 

 rence is not altogether satisfactory. A 

 most encouraging feature is the rise 

 (though only slight), of the interest 

 earned on the funds, from £4 14s. id. per 

 cent. to £4 14s. /d. per cent. This 

 rate is even better than it looks, for had 

 the society computed it on the method 

 adopted by most offices, it would have 

 come out at over £4 17s, As it is, the 

 rates and taxes, ^^9800, were deducted 

 from the interest income, and the rate 

 computed on the balance, which brings 

 out a lower percentage, but is based on 



sound principles. 



* * * 



Of more importance, however, is the 

 conservative valuation of the policy lia- 

 bilities, and of the assets. A satisfactory 

 answer concernin'^' the former was given 

 b>' the last triennial investigation, in 

 19 10 In regard to the assets, the posi- 

 tion is not so clear, for no information 

 is given as to the \aluation of the assets. 

 Their total is now ^^"7,^/7.000 (a growth 

 of nearlv :(;"6oo,ooo for the year\ made 

 up chiefly of loans on mortgages, 

 ^^4.527,000; freehold property, 



^8 1 3,000 ; loans on policies. ^^'720,000 ; 



