MANAGEMENT OF AN INSURANCE OFFICE. 285 



its accumulations,, is the consideration for the sum in- 

 sured ; the remaining part p, with its accumulations, is 

 due under the name of profit or restitution, in a strictly 

 mutual office. 



The application of the preceding method would require 

 that a calculation should be made once in every year of 

 the quantity p and its accumulations, for every individual 

 insured. This having been done, and the surplus 

 A -f P C having been calculated from a true table of 

 mortality, it is then known in what proportion any two 

 individuals insured are claimants upon this fund. Sup- 

 pose that p and its accumulations amount, in the case of 

 the persons X and Y, to 1001. and 150/. Suppose that 

 A + P C is 100,000/., and that the sum of all the 

 excesses of premium with their accumulations, of which 

 the 1 001. and 150/. just mentioned are items, is 120,000/. 

 It matters nothing that the last sum is greater than 

 100,000/., since we are not speaking of a fund on which 

 there are definite claims, but of one the nature of 

 which it is to be of uncertain amount. The use of the 

 items IOOL and 1501.., and of the sum total of 120,000/., 

 is to enable us to divide the real fund of 100,000/. among 

 those who raised it, in the proportions in which they 

 contributed towards it. Thus if X and Y were to die 

 in the year of the valuation, it would be fair that they 

 should receive such proportions of the 100,000/. as IOOL 

 and 150J. are of 120,000/.; that is, five-sixths of 1001. 

 and 150/. This method proceeds upon the principle that 

 all the excess of premium is taken in trust as a guarantee 

 for the main fund, and is to be returned if not wanted, or 

 such proportion of it as is not wanted. It confines the 

 insurance, or provision against the uncertainty of life, 

 entirely to a stipulated sum, and regards all that part of 

 the premium which is not really wanted to provide this 

 sum, for one man with another, as paid into a com- 

 mon savings' bank, in which no equalization is supposed. 

 The labour of making the calculations would, I ima- 

 gine, prevent any office from adopting the preceding 

 plan, so as to carry it into execution yearly. With a 



