5 2 A 



FINANCIAL AND BUSINESS QUARTER. 



CONDUCTED BY ALEX. JOBSON, A.I.A. 



AUSTRALIAN MUTUAL PROVIDENT SOCIETY. 



The report of this Society for the 

 year 191 2 is easily the best the Directors 

 have yet issued. In almost every re- 

 spect it shows solid progress. The pro- 

 fits were greater than those of any 

 previous period, while the growth in 

 business in force was phenomenal. The 

 standard of the valuation of the policy 

 liabilities was much strengthened, and 

 of a necessity the reserves against those 

 obligations materially increased. In 

 one thing only was there no growth. 

 The bonuses allotted to individual 

 policies were not increased ; in fact, in 

 some cases they were slightly lower, for 

 though the profits were greater there 

 were many more policyholders to share 

 in them. Still, for all that, the mem- 

 bers have no cause for complaint, for 

 their bonuses are still well above those 

 granted by any other Australian office, 

 with one exception. 



Comprehensive in many respects 

 though this Society's report is, it unfor- 

 tunately does not give much informa- 

 tion of importance concerning the 

 valuation of its assets. They now 

 amount to nearly £30,400,000, and 

 their integrity is therefore of great im- 

 portance. They consist for the most 

 part of mortgages, 40.5 per cent, of the 

 total ; Government and public securi- 

 ties, 37.2 per cent. ; and loans on 

 policies, 16.8 per cent. The mortgages 

 form a large proportion, and necessar- 

 ily require special attention. That they 

 get that attention seems probable, for 

 the properties acquired by foreclosure 

 only amount to £107,000, about 

 £45,000 less than they were a year ago, 

 on which reduction a profit of £22,000 

 was made. The Directors, too, are ap- 

 parently satisfied at present with the 

 valuations generally, for they consider 



that the investment fluctuation reserve 

 of £36,000 is insufficient. At the same 

 time they intend to build this reserve up 

 steadily from year to year to provide 

 for contingencies. Generally speaking, 

 the position as regards the assets re- 

 duction seems sound enough as far as 

 one can judge, which, however, is not 

 very far, seeing that the report affords- 

 no information on which to base a 

 definite opinion. 



The situation in regard to the valua- 

 tion of the policy liabilities is much 

 clearer. The standard of valuation is- 

 a sound one, and is automatically be- 

 coming more stringent each year. Dur- 

 ing the year certain classes of policies 

 were valued on a more severe basis than 

 in 191 1, which necessitated a special in- 

 crease of £62,000 in the reserves against 

 those policies. The intention of the 

 Directors is to adopt eventually a 3 per 

 cent, valuation rate for all with profit 

 policies. This will not only make the 

 policy liabilities still more secure, but 

 will also give the members a larger in- 

 terest profit. That profit of course con- 

 sists in the excess of the interest earned 

 over that assumed in the valuation, 

 which excess will be considerable if the 

 Society continues to earn as high a rate- 

 as that of £4 1 os. 4d. per cent, current 



in 191 2. 



* * * 



The interest factor contributed very 

 materially to the net profit of £960,000 

 earned last year, but a much greater 

 factor was the favourable mortality, for 

 the claims were well below those ex- 

 pected. Economy in management also- 

 played an important part, for the ex- 

 penses were only 13.92 per cent, of the 

 premium revenue, a low ratio, and a 

 little less than that experienced in 191 1. 



