A summary of the results tabulated according to the size of society (as measured by the number of assurances in force) is given below:

380,229

24

7

5

170

540,674
£

14,083,016
£

15,529,215 £

525,296 £ £ 4,064,884 5,985,630 7,527,883 185,372,790 202,951,187 1,207,935 1,094,038 1,513,734 28,818,156 32,633,863

...

322,370 147,894

95,144 141,596

It will be observed that over 90 per cent. of the assurances have been effected with five large societies, which transact business throughout the country and in most respects are indistinguishable from certain industrial assurance companies.

(2) Basis of Valuation.

For the most part the basis of valuation was similar to that adopted in the case of the companies. The valuations of the societies carrying on weekly whole-life business, including those of the five large societies, were based for the most part on the Mortality rates in English Life Table No. 6 or No. 8. Approximately one-third of the societies, excluding the five large ones, have no weekly business, while in some cases the contracts include sickness and other insurance in addition to the assurance of a sum at death. The basis used for societies paying sickness benefits has usually been the Manchester Unity experience, 1893-97.

The rates of interest used in the majority of the valuations were 3 and 4 per cent., but the two largest societies, the Liverpool Victoria Friendly Society and the Royal Liver Friendly Society, representing in assets three-quarters of the whole group, were valued at 3 per cent., although both societies were earning 5 per cent.

In the case of the Liverpool Victoria Friendly Society the valuers state that the employment of 3 per cent. leaves a considerable margin of safety which will materialise into surplus in the future. In the case of the Royal Liver Friendly Society a table was used which was more in accord with the experience of the society, but the rate of interest was reduced from 3 to 3 per cent., and thus the surplus remained approximately the

same.

Collecting societies are required to specify in their rules the proportion of contributions to be set aside for management

expenses, and the valuations have in nearly all cases assumed that the provisioin so made would be adequate. In a number of cases the proportion specified in the rules had been insufficient to meet the expenditure during the years immediately preceding the date of the valuation and this was commented upon by the valuers.

(3) Results of Valuation.

The general conclusion drawn from the results of the valuations of the collecting societies is that on the whole the financial position of the societies has improved. Societies which were solvent at the previous valuation generally show increased surpluses, and of 40 cases of deficiency at the previous valuation 20 Low have a surplus, while a further 18 show an increased percentage of solvency. The improvement thus secured is principally due, no doubt, to the increase in the rate of interest earned on the funds and to the diminution of the rate of mortality to which the members have been subject, but in many cases it is directly attributable to the requirements which the Commissioner has been able to make acting under the powers conferred upon him by the Industrial Assurance Act. Some societies which were clearly insolvent, were required by the Commissioner, before being allowed an extension of time for making the deposit of £20,000 under the Act, to reduce their benefits or increase their contributions to an extent which left them a reasonable prospect of solvency in the future. Other societies, which apparently were insolvent because their funds were badly invested, were, as an alternative to reducing their benefits, induced to re-invest their funds to better advantage, thus enabling their valuers to assume higher rates of interest.

It is, perhaps, worthy of note that in many cases additional reserves have been made for the free paid-up policies required to be granted hereafter under the Industrial Assurance Act, 1923, s. 24, and that notwithstanding this addition to the liabilities, the valuations have brought out the increased surpluses and reduced deficiencies noted above.

(4) Surpluses.

Of the total surpluses, amounting to £1,934,973, no less than £1,098,527 is attributable to the three societies following:

In the case of the Scottish Legal a period of five years had elapsed since the previous valuation and the surplus therefore includes the profits realised over a full quinquennial period. The Liverpool Victoria had made a valuation as at 31st December, 1923, under the Friendly Societies Act and the first valuation under the Industrial Assurance Act, 1923, was taken two years later. Except in so far as it includes the amount carried forward from the previous valuation, apparently something in excess of £150,000, the surplus above shown therefore represents the profits which accrued over two years' working. Similarly the Royal Liver had made its last statutory valuation at 31st December, 1923, and the first valuation under the Industrial Assurance Act was taken at 31st December, 1925. This society, however, makes an annual valuation, under its rules, and the surplus carried forward on 1st January, 1925, having been about £55,000, the profit earned during 1925 was over £335,000.

Of the total surplus shown by the three societies it would appear that sums aggregating nearly £700,000 were applied for the benefit of the members, while bonuses to staff and grants to Staff Superannuation Funds absorbed £97,000, and special reserves £42,000.

Of the other societies, 127 showed surpluses amounting in the aggregate to £836,490. They are, for the most part, local bodies and some of them are of a type to stimulate satisfaction in local institutions, cases being found in which, with sound tables of contributions and benefits and under the influence of efficient and economical management, substantial surpluses have for many years been shown on valuation and have been applied, on correct principles of distribution, to enhance the benefits of the members. When it is added that among societies of this type there are some which (in company with the most progressive companies) have long anticipated the new statutory requirement as to the grant of free paid-up policies in cases of lapse, e.g., the Aberdeen and Northern Friendly Society, which has about 83,000 assurances in force, the Blackburn Philanthropic Mutual Assurance Society (55,000 assurances), and the Tunstall and District Assurance Collecting Society (91,000 assurances), it will be realised that as a medium for the modest form of insurance with which this report deals the large insurance company or collecting society, which counts its policyholders by the million. enjoys no inherent superiority over a well-managed local institution.

It is not, of course, the case that all local societies are equally progressive. It is found, for example, that in a number of cases, although substantial surpluses have accrued, no attempt has been made to utilise them in the members' interests. This is probably due as much to indifference to the valuation results as to caution on the part of the management. It is obviously proper that members should reap the benefit of the favourable

conditions which exist, but unfortunately they do not appear to realise that it is in their power under the rules to ensure that their interests receive proper attention.

(5) Deficiencies.

Of the deficiencies which amount to £357,149, no less than £264,745 is attributable to four societies. In the case of the Royal Co-operative Collecting Society with funds amounting to £408,458, the deficiency is £119,999, and is due to unsatisfactory management in the past. Up till 1919 the expenses of management were very heavy and the funds were not invested to earn a satisfactory rate of interest. Moreover, the obligations of other societies had been taken over without the transfer of adequate assets and certain classes of policies had been granted at insufficient rates of contribution. Substantial improvement has, however, been shown in recent years. The deficiency has been reduced since 1919 by £170,000, the management costs have been substantially curtailed, and the rate of interest earned by the funds has been increased from 3.6 per cent. to 5 per cent. The valuation has been made on a satisfactory basis and there is a margin of 1 per cent. between the rate of interest assumed to be earned in the future and that realised at the present time.

The next largest deficiency was shown by the National Labour and General Friendly Collecting Society. A report upon an Inspection into the affairs of this society will be found at page 55 as a result of which the society is now being wound up. The deficiency, amounting to £56,993 arose in the Sickness Fund of the Society.

The two other societies with considerable deficiencies occupy a somewhat anomalous position in regard to industrial assurance. They are the only prominent members of a small group of societies whose principal object is the provision of sickness benefit but they employ collectors and are brought within the scope of the Industrial Assurance Act by reason of granting death benefits. As their operations are limited to a radius of ten miles from their registered offices, they have been exempted from various provisions of the Act, including, as their members pay a single contribution covering both sickness and death benefits, the requirement to maintain a separate industrial assurance fund. In the circumstances the deficiencies in these two cases, amounting to £87,753, have very little to do with industrial assurance. It is, however, worth remark that the statutory powers of the Commissioner in cases of insolvency have proved a useful lever in inducing the members in both cases to effect changes which have substantially improved the societies' financial position.

Of the remaining deficiencies a total of £39,966 is attributable to 9 societies which were unregistered until the Act of 1923 came into force. The balance of £52,438 represents the deficiencies of 25 societies. In some of these cases the deficiencies are

relatively small and in the others remedial action has been taken under directions from the Commissioner.

(6) New Tables.

As in the case of the Industrial Assurance Companies, the large societies have, as a rule, adopted new tables under which the benefits for future entrants are increased. As there is a close affinity between the business of the companies and that of these societies the revisions of the tables have followed the same course in both cases and the figures previously given as to the changes made by the Companies will sufficiently indicate, therefore, the steps which the large societies have taken. It is observed also that in the case of the Royal Liver the surplus allotted to members is being utilised to bring the benefits of existing contributors up to the new table.

D.-Aggregation of Valuation Returns.

On page 79 a short summary of the valuation results and other statistics is given for the companies and on page 88 the like information is given for the collecting societies. The figures below show the position in regard to the companies and societies combined. It will be recollected that in certain of the companies the surplus declared was- a net figure after the transfer of various amounts from the Industrial Assurance Fund. In these cases the full surplus is included.

It will be seen from these figures that the number of policies in force at the last valuation date-largely 31st December, 1926– approached 72 millions, an average of about two policies for every member of the industrial population of the British Isles, that the sums assured by these policies exceeded one thousand million pounds and that the funds accumulated in respect of the resulting liabilities approached two hundred millions.

The result of the valuations is to suggest that on the financial side industrial assurance has made a notable advance in recent years. Expenses, measured in proportion to the premiums collected, have diminished (though not in equal degree over the whole field), the bases of valuation have in many cases been