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Photographic

ociences
Corporation

rv^

23 WEST MAIN STREET

WEBSTER, N.T. I4S60

(716) 872-4503

C/.

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CIHM/ICMH
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1 2 3

LIFE ASSOCIA TION OF SCOTLAND.

jVloNTP,EAL, January 1870.

Dear Sir,

As you are interested in the Association, there is enclosed here-
with a copy of our new Pamphlet and annual Report, ccntaining full statements of
our position and transactions.

I have to draw ycur particular attcnticn to the Special Intimation by the
Directors as printed en the first pa^e of the Pamphlet, relating to the unusual close
and continuous Atidit to zvhich the iransacticns of the Association have for many
years been subjected under the hands of a skilful Public Accountant (apart from,
the Directors and other efficials), and to the rigid tests tvhich have been applied in
the valuations of the Life Liabilities. Statements to a similar effect have frequent'-
appeared in the Aiinual Reports, but the Directors have thought it desirabh to r ^fii
the intimation in a more emphatic form, in consequence of the present pohik^^
at least one Assurance Company prcmincntly ecmmeuted on in *he public news-
papers. It had for a considerable time been known among Actuaries that the career
of the Office alluded to, must very shortly have reached its present crisis. But al-
though the result in (hat case has given no surprise to those in the profession, it has
probably occasioned the less-informed portion of the public to entertain some feeling of
distrust of Life Assurance generally. Unfortunately also, the co:nmcnts and discus-
sions that have follozved in the newspapers have not alzmys been luritten with Judg-
ment. Indeed, many of them exhibit not a little ignorance of the subject, and tend
rather to mislead and confuse.

For Instance — In some of these popular discussions it lias been affirmed that a Life Office of stand-
ing ought to have accumulated Funds amounting to a certain proportion of the Sutns Assured; and
again, that the Funds ought to amount to a certain number of times the Premium Income. Both of
these ideas are entirely erroneous, for an Office may fully satisfy any such requirement, and yet its
Funds may, or may not, be enough to meet its liabilities. Actuaries well kno%v that Life Assurance
Liabilities cannot be estimated ei.'en roughly, in any such manner.

CERIAIN Newsfapers have published also tables of the Funds, Risks, and Income, &c., of
the several Life Offices. Thefgures in these are in many cases most inaccurate, and even if accurate,
are perfectly useless for the purpose intended. A simple comparison of the amjunt of Funds exhibited
by two Offices, having the same nominal amount of ^issurance Risks, can afford no proper ground for
forming an opinion regarding either of the Offices; and for this reason, that the risks of the two may

\be

be very different in t/ie ages of the lirt:s\ the er, iuramx of the pi>lidei, or the d:scriptim of the astu-
ranees, and also as regards the amount of Bonus Additions (f any) attached to the policies. Each
of these points — /// which no two Offices are a/tke — is of the highest importance, and affects to a very
great extent the amount of Funds required to meet the liabilities. For example, Policies effected by a Urn
ited number of payments {which are much more numerous in some Ofices than in others), and Bonus
Additions to ordinary Sums assured, rc,,iure !'ir£er Fui^ds ii},Ji<md than the satne att^f^nt of common
Life folTctes^'' You Will^iius, sefthat little reliance is to be placed upon the guidance of newspaper
writers on so purely professional a su/'Ject as Actuarial Valuations.

The ultimate effect, however, of greater public attention to the conduct of Life
Offices, as well as the action of Parliament now in prospect, will doubtless be an
increase of transactions in sottnd and useful Institutions like the Life Association.
Tha Directors of the Association have always been careful to act on the most approv-
ed and prudent principles in the admission of Lives, the investment of the funds, and
in every other department of the business. Excessive expenditure and all speculative
transactions have been avoided, and thus the Funds have been maintained without
loss, and have uninterruptedly undergone a continuous and most ample increase, fully
equivalent to the liabilities. In the valuations, only what is technically called the
"■net premium'' has been employed for the purpose of ascertaining the amount of Funds

■mat the Sui^ Assured tmd &tker^eftgttgetn€ii4^4^tt''tffect bdngier^^
unappropriated and untouched, the whole of the extra loading or margin beyond the
"net premium." The Asscciateon has, thus,— over and above zvhat is required to meet
its entire liabilities,— a large surplus income of many thousand pounds per annum,
reserved to come in from year to year as an additional cover for expenses and any
contingencies that may arise.

The Directors are desirous to avoid indulging in extravagant promises and as-
sumptions of . beriority, such as are put forth by some other Offices; but they are
fully warranted in stating that they have been enabled to give Bonuses and other
Benefits of the highest class as compared with those of any of the Associations com-
petitors, and that their Policy-holders are treated with a liberality evc7i beyond zvhat is
usual.

I have the pleasure to state also, that the new Entrants for the current year up
to this time, in the principal parts of the kingdom, as well as in Canada, have been
considerably more than for the same period of last year.

I am.
Dear Sir,

Yours faithfully,

P. WARDLAW,

Secretary.

-^".,

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