MANAGEMENT OF AN INSURANCE OFFICE. 289 



the surplus, is 250,000/., which being 25 parts out of 

 85 of the whole claims, or 29^7- per cent., will afford 

 129 1 3 T /. for every 100/., which is guaranteed. Those 

 who die in the year of this valuation, may therefore 

 receive that sum. 



The principle on which the preceding division is 

 made, is, that if the same state of things continue, 

 every one will in turn receive the same dividend. But, 

 can such a prediction be made ? Undoubtedly not, 

 for the fluctuations, both of those who come into 

 the office, and those who go out, will tend to produce 

 variations. It is very unlikely that any office should 

 maintain itself for a long series of years nearly in the 

 same position ; and, since the idea of allowing any per- 

 manent diminution of the surplus must not be ad- 

 mitted, there is no alternative except an arrangement 

 for a gradual increase, which it is the object of this mode 

 of division to make as slow as is consistent with the cer. 

 tainty of having it. But in this case, it may seem as 

 if the old system were revived, and a fund instituted 

 by the present insurers, for the sole benefit of those 

 who come after them. There is, however, an im- 

 portant difference between never paying more than the 

 guaranteed minimum, so that all the surplus goes to- 

 wards that fund, and drawing upon the surplus nearly 

 to the full amount which safety would allow, leaving 

 only such a trifle to augment the fund as is requisite to 

 avoid too large an out-going. The old principle, then, 

 which formerly prevented any bonus whatsoever, is here 

 merely applied to such an extent as to keep the bonus 

 within proper limits. 



If the tables of mortality by which the profits are 

 divided, be actual representatives of existing mortality, 

 and if the number of members remain nearly the same, 

 the indications of these tables, implicitly followed, 

 would soon reduce the surplus of the office to that 

 which is barely necessary for the extreme payment 

 which the premiums will admit. To take a case : sup- 

 pose that the premiums will in the long run pay 125/. 

 u 



