The principles upon which the valuation and distribution of profits among the policyholders are made (as set forth in this answer and in Nos. 3 and 4) are determined by the Deed of Constitution, as amended by subsequent resolutions at general meetings of the Society. This provides that

"Primo, An account shall be taken of the Gross Funds, Assets, and Property of the Society.

Secundo, An Account shall be taken of the Whole Obligations of the Society and Charges on the Gross Fund.

"From these accounts of the Gross Fund, and of the Obligations of the Society, the surplus at each period of investigation shall be ascertained and declared. The Directors shall have the power to allocate the whole surplus which shall then be ascertained, in retrospective additions to all the policies of participating members, issued up to the date of such investigation, and then in force; and the said additions shall be allocated, in the case of policies to which additions have previously been made, not only on the sums originally assured, but also on the previously vested additions (not surrendered at the date of investigation), and that for the number of years which shall have elapsed since the immediately preceding investigation; and in the case of policies which shall not have previously received additions on the amount originally assured, and that for the number of years such policies shall have existed previous to the investigation in question. Besides the foresaid retrospective additions, contingent prospective additions shall be made on all participating policies which may become claims between one period of investigation and another, and which shall, at the date of their so becoming claims, be of not less than five years' standing, and that at the rate of threefourths of the retrospective additions allocated at the immediately preceding investigation; which contingent prospective additions shall be in proportion to the sums assured (including all previously vested additions), and to the duration of the policies since the said immediately preceding investigation, and shall be charged upon and paid out of the surplus fund to be realized during the period for which such contingent prospective additions become payable."

The proportion of the annual premium income reserved as a provision for future expenses and profits is 20-398 per-cent in the case of participating policies, and 12.931 per-cent in the case of non-participating.

Every participating policy in force at the date of division receives an allocation of bonus; but in the case of a policy then of less than five years' endurance, the bonus does not vest until it shall have been in force for five years complete.

The total amount of profit made by the Society during the quinquennium was £192,236. 158. 2d.

The contingent bonus payable on policies becoming claims between the previous and the present divisions, for each year's premium paid during that term, is chargeable on the profits of this quinquennium, and on this account £13,548 has been paid since 1st March 1868.

The balance of £178,688. 15s. 2d. was allocated in additions of £306,818 to the sums assured by the whole existing policies effected on the participation scheme, being 10,677 in number, the sums thereby assured and previous bonuses amounting to £6,674,958. 38. 5d.

The vested bonus is allocated to policies which have not participated in previous divisions at an equal rate per-cent on the sum assured, irrespective of age, according to the number of premiums paid; and to policies which have previously participated, at the same rate per-cent for five years on the sums assured, increased by previous bonuses which have not been surrendered.

Specimens of Additions to Policies of £100, provided previous Bonuses have not been surrendered.

FOR ALL
AGES

DURATION OF POLICY.

5 Years. 10 Years. 15 Years. 20 Years. 25 Years. 30 Years. 35 Years. 40 Years.

AT ENTRY. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. 5 0 05 5 05 11 16 3 06 13 67 6 108 2 18 17 11

A policyholder is entitled at any time to receive the value of the vested additions as a present payment, or to commute them into deductions from the premiums either for five years or for life, at rates varying according to age. A table of these values is printed on the Bonus Notice, from which the following are extracts:—

Value of £10 of vested Bonus Additions.

CONSOLIDATED REVENUE ACCOUNT for five years, commencing 2nd March 1868, and ending 1st March 1873.

SUMMARY AND VALUATION OF THE POLICIES, (see p. 365).

VALUATION BALANCE SHEET, as at 1st March 1873.

The average rate at which the whole realized funds of the Society were invested at the close of each year during the period since the last investigation was at follows:—

£ s. d.
4.5 8
4 4 11

4 5 4

450

The Society has no table of minimum values for the surrender of policies. For participation policies effected at the ordinary tabular

SUMMARY AND VALUATION OF THE POLICIES, as at 1st March 1873.

10,972 6,765,274 181,443 10 9 144,105 3,818,391 2,456,491 1,963,358 1,855,032

rates on which three years' premiums have been paid, the minimum surrender value at present allowed is thirty-three per-cent of the premiums paid, and in addition the published value of the vested bonus.

For non-participation policies (whole life) and for endowment assurances after payment of three premiums, the minimum value allowed is twenty-five per-cent of the premiums paid.

The extra premiums charged for foreign residence have been thrown off before making the valuations. The additions to the premiums on under-average lives (which are few in number) have also been thrown off in the valuations, the annual extra being held to cover the additional risk.

LIFE ASSOCIATION OF SCOTLAND.

Established 1838.

VALUATION AS AT 5 APRIL 1871.

VALUATIONS OF LIABILITIES.

The Abstracts of the Valuations of the Association's liabilities have been made up, like the Statements of the Accounts, closely in accordance with the forms in which they must be deposited with the Board of Trade. They will be published along with the Statements of every Life Office in the kingdom in such full detail as that any actuary, if so disposed, will be able to check the calculations for himself. Notwithstanding the publicity thus to be given to details which have hitherto been only placed on the table at the annual meetings, the Directors have found no reason to make any change in the tables or principles on which the valuations have hitherto been conducted, and they have the fullest conviction that the Statements will bear the strictest scrutiny, whether as regards the valuations themselves, or the amount of surplus arisen since the preceding investigation.

The tables of mortality used by the Association were furnished at almost the commencement of its business, by the late Mr. Griffith Davies, and stated at the time to have been deduced from the experience of some of the principal London Life Offices. They show, in fact, a mortality somewhat less than that of the Equitable Society's experience published by Mr. Davies in 1825, the last age of life being 97. The rate of interest used by the Association has been always 3 per-cent for Life Assurances. The Annuities have been valued by the same mortality tables at 4 per-cent interest. The calculations were made in the first place, as usual, by the Manager and his assistants; and not only have they been checked and verified by Professor Kelland of the Edinburgh University, one of the Directors, who has taken an interest in the valuations from the commencement of the Institution,— but they have been submitted to and certified also by the Auditor of the Association's accounts-Mr. William Wood, Chartered Accountant and Actuary. The results are fully exhibited by the annexed "Summary of the Valuations" and "Valuation Balance Sheet". As on former