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1852, by Rev. J. W. Worthington, Doctor of Divinity, and Thomas Price. The cap. was to be £50,000, in shares of 10. The Co. did not go forward.
ANGLO-SAXON LIFE AND GUARANTEE.-This Co. was projected in 1853, but does not appear to have gone far beyond regis. of title.
ANGYLDE. The rate formerly fixed by law, at which certain injuries to person or property were to be paid for. In injuries to the person it seems to be equivalent to the 'wer,' i.e. the price at which every man was valued.-See GILDS.
ANNESLEY, ALEXANDER, of the Inner Temple, Solicitor, pub. in 1808: A Compendium of the Law of Marine Ins., Bottomry, Ins. on Lives, and of Ins. against Fire; in which the mode of calculating averages is defined and illustrated by examples. The author says:
In the arrangement of the Compendium, the very judicious plan of Mr. Park has been followed, beginning with the Pol. the foundation on which the entire superstructure is raised, descending to a more particular view of the subject, and entering into the minutiae of the system of British Maritine Law with all possible brevity, without losing sight of that degree of accuracy and perspicuity which can alone constitute the merit of a work of this nature.
This is a very useful book; and we shall quote from it occasionally in these pages. ANNIHILATOR FIRE. An instrument in which a large quantity of non-combustible gas, chiefly carbonic acid, can be quickly generated. Directed on burning matters, this gas stops combustion by excluding air.-Brande. We shall give an account of numerous contrivances of this sort under FIRE ANNIHILATORS.
ANNUAL ACCOUNTS.-See ACCOUNTS.
ANNUAL BONUS LIFE (AND FIRE) ASSU. So., projected in 1852, but apparently never completely regis. The prosp. stated that the Co. was to be founded on the principles of the Art Union of Lond. The plan was certainly a novel one. The payment of 10s. 6d. p.a., which applied to persons between the ages of 10 and 20 years, was to secure a certain sum at death, varying with the age, thus: at 10, £80 115. Id. ; at 15, £58 35. 6d.; at 20, £51 3. 11d. The guinea scale extended to persons from 20 to 70 years of age: LI IS. p.a. secured, age 21, 100; 25, £90 os. 2d.; 30, £79 4s. 6d. ; 35, £69 13s. 10d.; 40, £61 10s. Id.; 45, £54 3s. 4d.; 50, £47 15s. 3d.; 55, £38 10s. Id.; 60, £25 16s. 3d.; 65, £17 12s. 9d; 70, £12 2s. 3d.
The prems. were said to be calculated on the basis of the ENGLISH LIFE TABLE, and certified by the Actuary to the Commissioners for the Reduction of the National Debt! Unless persons insured for at least two half-guinea chances, they were excluded from the enjoyment of a bonus.
The "annual bonuses" were to be paid to the insured, "not in equal fractional amounts, but in accumulated sums, as bounties for the encouragement and promotion of life ins. in general, and varying in amount from £10 to £1000." The first distribution was to be made 1st July, 1853, and continued every succeeding year, in the manner of the Art Union: "When every member of the So. who has subscribed one guinea before 1st June, will have an opportunity of balloting for a large share of the annual profits of the So." Two hundred and fifty bonuses were to be balloted for, of the aggregate value of £5000! The editor of the Post Mag. designated it a lottery in disguise.
There was to be no medical examination, except in case of a diseased life; a declaration of health being sufficient. All that had to be done was to call upon the agent, pay the half-guinea, or guinea, and take the receipt. It is believed that 2000 or 3000 of of these so-called insurances were issued. The prosp. said:
The great success which has crowned the operations of sos. based on the principle of granting prize rewards, induces the confident belief that were a prospect of more immediate gain offered to the public than is at present offered by the mode of paying bonuses, the practice of Life Ins. would be very greatly extended; but, unlike a lottery, which, as a question of morals, it in no respect resembles, the good contemplated will be accomplished without inflicting pecuniary injury upon any one.
No directors' names were pub. ; the only name on the prosp. being that of George Baynham, "registrar and clerk to the So." But it transpired afterwards that Mr. Henry Owen was actuary.
An awkward circumstance occurred very early in the history of the enterprise. 1862, the actuary of the Co. (also sec. of the Counties Union) was charged at the Mansion House, before the Lord Mayor, with having unlawfully conspired with divers other persons to cheat and defraud Dr. John Hall Davis; and that in pursuance of the said conspiracy he and they, under false pretences, had obtained from Dr. Davis the sum of £100. He (the actuary) was committed, and afterwards tried at the Old Bailey, and acquitted— but the project did not survive the blow.
ANNUAL LIST OF MEMBERS.-Every co. regis. under the Cos. Act, 1862, and having a cap. divided into shares, shall (sec. 26) make once at least in every year, a list of all persons who, on the 14th day succeeding the day of the first ordinary general meeting in each year, were members of the co. ; and such list shall state the names, addresses and occupations of all the members therein mentioned, and the number of shares held by each of them; and also the following particulars:
1. The amount of the capital of the co. and the number of shares into which it is divided.
2. The number of shares taken from commencement of co. to date of summary.
3. The amount of calls made on each share.
4. The total amount of calls received.
5. The total amount of calls unpaid.
6. The total amount of shares forfeited.
7. The names, addresses, and occupations of the persons who have ceased to be members since the last list was made, and the number of shares held by each of them.
The above list and summary shall be contained in a separate part of the register, and shall be completed within seven days after the 14th day, and a copy forwarded to the Registrar of Joint-Stock Cos. Penalty £5 per day to co., manager, and directors.
The 30 & 31 Vict., c. 131 (1867), provides (sec. 32) that, after the issue by the Co. of a share-warrant, the above ann. summary shall contain the following add. particulars: The total amount of shares or stock for which share-warrants are outstanding at the date of the summary, and the total amount of share-warrants which have been issued and surrendered respectively since the last summary was made, and the number of shares or amount of stock comprised in each
ANNUAL MORTALITY.-The ordinary average ann. mort. of a European pop. may properly be estimated at one death to every forty living. This proportion is subject to little variation on account of any common increase or decrease of pop.-Edmonds.
Modern mort. tables are arranged in such a manner as to show the ann. mort. p. c. for each age of life. This is a very great advantage in many respects. Among other uses it furnishes a means of testing the effect of SELECTION, etc. This constitutes an important feature of the ENGLISH Life Table, and the EXPERIENCE Table No. 2.
The subject will be fully discussed under LAW Of Mort.
ANNUAL PENSION.-A yearly profit or rent.-Scotch Law.
ANNUAL PREMIUMS -All ins prems. (except on voyage pol. in Marine and Mariners' Life ins.) are calculated to be payable annually in advance. Where the payments are made half-yearly, quarterly, monthly or otherwise, an add. is made for loss of int. arising from the non-use of the money, and a small charge should also be made for add. trouble involved in preparing receipts, collecting, and passing through the books. In F. Ins., Accident, Cattle, Fidelity, Glass, Hail, etc., Ins. the prems. are receivable annually only. In several Life offices the yearly prems. are made to run from certain fixed days, as in the National Provident. In Life Ins. the ann. prems. are “equalized," or they would fluctuate with each year of life. See LIFE INS. PREMS.
ANNUAL SUMMARY.-See ACCOUNTS OF LIFE OFFICES; and ANN. LIst of Members. ANNUITANTS.-Out of the recent winding-up of the Albert the law regarding the position
of annuitants in ins. asso. whose bus. have been trans. may be considered as settled. annuitant who has not by express written assent-by some instrument of equal force with the orig. grant-released the asso. orig. granting the annuity, from payment thereof, will be able to fall back upon its shareholders and property for payment. The intermediate asso. paying the annu. will be regarded only as the agent of the orig. co. ; hence the question of NoVATION will not arise. This indeed was held in the case of the English and Irish Church Ins. Asso. ; but it may now be regarded as settled in Pott's caseDict. of Decisions in Ins. Cases.
ANNUITANTS, Longevity of.-The longevity of annuitants has become proverbial. But as proverbs are not always to be relied on in business matters, we propose to record a few facts of such a character as not to admit of dispute. These are drawn from the records of tontines and government annuity schemes, and in every case there has been judicial proof of age. In the English tontine of 1693, out of 1002 persons enrolled, 12 reached 90 and upwards, and one, a lady at Wimbledon, reached 100. In the Irish tontine of 1773, 5, 7, there were enrolled 1415 males and 1969 females, most of them at very young ages. Previous to August 1856 there had died at age 90 and upwards, males 18, the oldest being 95; females 29, the oldest being 98. There were then living aged 75 and upwards, 60 males and 120 females.
In the English Tontine of 1789 there were enrolled 4177 males and 3974 females, most of them also at very young ages. Previous to August 1856 there had died at age 90 and upwards, males 18, the two oldest being 95, females 23, the oldest being 99. There were then living aged 64 and upwards, males 755, of whom one was 93, and another 94 ; females 1084, of whom the oldest was 92.
Among the life annuitants of the Sinking Fund commencing 1808, there had been enrolled by the 31st Dec. 1850, males 6217; females 10,595. Of these the majority were admitted at advanced ages. There had died previous to 8th May, 1854, at age 90 and upwards, males 125, the oldest being 98; females 174, the oldest of whom was 99. There were still living at 90 and over, males 25, females 26.
But among the annuitants of the Sinking Fund was another class, selected by individual speculators, and by ins. offices, and not included in the preceding figures. They were males, and the result of the speculation is given under another head. [GOVERNMENT ANNUITANTS TABLE OF MORTALITY.]
Mr. A. G. Finlaison in his report of 1860 has given us materials to test the actual result. The number of the lives enrolled was 675, at ages ranging from 59 to 92, but very few beyond 81. Up to the 8th May, 1854, there had died at ages 90 and upwards 61, the oldest being 98. There were still living 369, of whom 8 were 90 and upwards.
But another and yet more important observation was made up to 10th June, 1856, confined to the 322 males who were entered at age 73 and upwards. Of these 321 had died,
68 aged 90 and upwards, and the remaining I was living aged 101. This was David Rennie, who was baptized 28th Feb. 1755, and died 2nd March, 1857, in his 103rd year. Some add. facts will be given under head of TONTINES. ANNUITIES.-An annuity has, in the strict technical acceptation of the word, been defined by Lord Coke to be "a yearly payment of a certain sum of money granted to another in fee, for life or years, charging the person of the grantor only." If the annuity be secured solely out of the rent of land, it is called a Rent-charge. [RENT-CHARGE.]
An annuity may be receivable during a definite number of years, in which it is termed an annuity certain. The value of annuities of this kind depends only on the rate of int. for money, and the number of years during which the annuity is payable. If the annuity be payable for ever, it is called a perpetual annuity or a perpetuity. If for a limited number of years, a term annuity. If not till after a certain date, it is called a deferred annuity. If its payment be dependent on the happening or non-happening of some particular event, it is called a contingent annuity. If the commencement or the continuance of the annuity is any way dependent upon the duration of any life or lives, it is called a LIFE ANNUITY. It is with these we have especially to deal in these pages.
A Life annuity may partake of some of the incidents of an annuity certain. If the annuity be for the whole period of any particular life, it is called a whole-term annuity. If it be on a given life for a certain number of years, it is called a term annuity; for a few years only a short-term life annuity. If the annuity be payable on any one life, provided another be then living, or providing some event happen or do not happen, it is a contingent life annuity. If it is not to be entered upon till after the death of some person or persons previously living, it is called a reversionary annuity. When it is continued only for a term of years, provided an individual or individuals then living shall survive that term, it is called a temporary life annuity. When it is payable during the lives of several persons living at the same time, it is called a joint-life annuity. When to the survivor of several lives, then a survivorship annuity. There are also increasing and decreasing annu. These may depend upon life or otherwise.
There is yet another definition. An annuity is curtate when it ceases with the last payment prior to the death of any specified life: complete when the payment is to be continued up to the day of the annuitant's death. See ANNUITY APPORTIONMENT ACT. The values of a life annuity must necessarily vary with the contingencies upon which it is dependent. There are actuarial rules for dealing with all the cases named. Two or more of the preceding contingencies may be combined; but however complex, they fall within the grasp of the experienced actuary.
ANNUITIES ON LIVES, HIST. OF.-The hist. of life annu. has remained to be written. We propose here to supply a considerable contribution towards the materials required for the purpose. By way of explaining the plan of the present chap.—which must of necessity be one of the most extended in this work-we may at once say that our treatment of life annu. will be historical, and not scientific. It would indeed be a matter of much interest to the actuary that the progressive formulæ evolved in the scientific treatment of the doctrine of life annu. should be recorded. We leave that task for other hands: we have ample work before us. It seems important further to remark, that while, at the present period, life annu. transactions are so far secondary and subordinate to life ins. as not prob. to bear the proportion of one-tenth-taking the cap. sunk in the purchase of life annu. as against the cap. to be realized by the payment of claims under life pol.-yet the facts were formerly very much the other way. For several centuries before the present life annu. constituted a recognized mode of investment-life ins. was regarded as a speculation. This will to a considerable extent account for the fact, presently to be noted, that all the earlier writers upon life contingencies directed their attention to annu.; and life ins. was an afterthought. Or in the apt dictum of Mr. E. J. Farren : "As life assu. formulæ were eventually derived from annu. calculations, so it was not until an after-period that life assu. attracted notice as a distinct subject."
It is impossible to fix at what period of the world's history annuities on lives were first brought into practice. It is only required for our present purpose to know when they first became subjected to any measure of value. Most of the best-informed writers agree that the first judicial occasion for valuing annu. on lives arose in consequence of the Falcidian Law (Lex Falcidia de Legatio), which in B.C. 40 was adopted in the Roman empire; and which declared that a testator should not give more than three-fourths of his property in legacies, and thus one-fourth was required to be secured to his legal heirs. It became necessary, in the execution of this law, to value all such legacies as were charged upon the succession for limited terms, or as annuities for life. It is possible that several means of accomplishing this were attempted. We learn from Æmilius Macer (A.D. 230), that the method which had been in common use at that period was as follows: From the earliest age until 30, to compute 30 years; from age 30, so many years are computed as are wanting until 60: therefore never more than 30 years are computed.
It was no doubt the employment of this defective method which caused the great jurist, the Prætorian Præfect Ulpianus, to give his attention to the subject. It is impossible to ascertain what materials he called to his aid in preparing his estimate, nor is it our present purpose to do so. All that can be learned on that subject we shall present to
the reader under the head of ROMAN LIFE TABLE. We only now present the results, reduced from their orig. crude form into a tabular arrangment, as follows:
It seems pretty certain that the element of interest was not taken into account; but this we shall discuss hereafter. The table is here presented as the first known measure of life annuity values graduated with reference to age. This very table has been brought into use during the present century by the Tuscan government for the valuation of life annuities!
By way of preface to the hist. of life annuities in England it seems necessary to call attention to the fact that in earlier times all int. for the use of money was absolutely forbidden : first, by the canons of the Church, and afterwards by direct legal enactment; while in many parts of the continent of Europe, where the power of the Church was more despotic, the prohibition was even more severe. The first real enactment against usury in Gt. Brit. (for the distinction between usury and interest had not then been created) was in the reign of Richard I. A.D. 1197, forbidding Christians to take any recompense for money lent. Other similar enactments followed. [USURY.] The Jews do not appear to have been prohibited in the enactment of Richard; and they and the Lombards became the great money-lenders of Europe.
Birth to 20
In 1282 the king of Scotland gave Eric, king of Norway a marriage portion of 14,000 marks with his daughter; reserving to himself an option of giving a life-rent of lands of the ann. value of 700 marks as an equivalent for half that sum. The annu. on the life of Margaret, then in her 21st year, was thus valued at 10 years' purchase. Whether this was the rule of the period, or merely an accident, cannot now be determined.
As the law did not recognize the lending of money at usance, it could not impose any limits upon the rate of int. charged. But the Jews and Lombards carried on the bus., charging no doubt most extortionately-as indeed they must, when the whole principal was at stake by reason of the transaction being in violation of the law. Hence, no doubt, was passed in 1545, 9th Henry VIII., c. 9, an act restricting the rate of interest to 10 p.c. [INTEREST OF MONEY.]
The celebrated Benvenuto Cellini, in his biography, relates that in the year 1552, he travelled to Rome to see his banker, Bindo Altoviti, who, as was not unusual at that period, was learned and a protector of the arts and sciences. His fortune had suffered by the political intrigues of the times, and instead of paying Cellini 1200 gold thalers due to him, it was arranged between them that he should pay an annuity of 15 p.c. during the life of Cellini in lieu of the money. Cellini speaks of other similar contracts, and from the manner in which he speaks of them it would appear that such transactions were not new, but long known, and of common occurrence.
In a work pub. in 1554, by Dr. Thomas Wilson, entitled A Discourse upon Usurie, etc., we find the following :
A corporation taketh a 100 li. (£) of a man to give him 8 in the 100 li. during his life, without restitution of the principall. It is no usurie, for that here is no lending, but a sale for ever of so much rent for so much monie. Likewise it is, if a private man hath a thousand pound lieing by him, and demandeth for his life and his wive's life, a 100 li. by the yeere, and never to demand the principall. It is a bargaine and sale, and no usurie, for that the principall is not to be restored againe at anie time. And therefore no lending can be pre-supposed.
Here is shown a clear perception of the business of life annuities, but shaped in such a form as to avoid the usury laws.
It appears to us, after a careful consideration of the subject, that the system of granting loans, repayable by annuities on lives, had been specially devised with a view to the evasion of the laws against usury prior to 1545; and that the evasions continued in practice after the passing of that Act. The authorities we shall have occasion to quote as we proceed will, we think, fully sustain this view.
The Act of 1545 had been repealed in 1552; but in 1570 the legal rate of int. was again fixed at 10 pc.
During the greater part of the 16th century probably much speculation was carried on in annuities by private dealers; especially in the latter half. The annals of that period teem with records of the doings of one Audley, who, although originally only a poor clerk with six shillings a week, was so neat an adept in the tricks of law, and so keen in his annuity dealings, which chiefly consisted in purchasing annuities well secured upon property, that he became one of the richest men of his time. His mode of action may be best judged of by the reply made to one of his victims, who accuses him of having no conscience,-"We monied people must balance accounts. If you don't pay me my annuity, you cheat me; if you do, I cheat you."-Francis.
Malynes, an English merchant, in his famous Lex Mercatoria, pub. 1622, gives the following remarkable account of the annuity dealings of that period:
Hauing intreated of monies deliuered at interest without casualtie, and so termed Vsurie by reason
of the contract of benefit without aduenture: it is conuenient to handle of monies deliuered vpon Liues, when merchants doe giue twelue vpon the hundred without pawne, called beyond the seas after the pennie 8: the moitie whereof with pawne is six upon the hundreth, or double eight, according to the penny 16 as aforesaid. The pennie 8 is 124, for eight times 123 maketh one hundreth: so the pennie 16 which is vsed for rents vpon houses or lands is 6, according to which pennie 8 vpon one life or double for one yeare (so they all liue) is equall vpon eight liues. This is much used in diuers cities beyond the seas, to draw monies into their hands, as for example:
One hundreth pounds is deliuered to haue two hundreth pounds for it at the yeares end vpon eight liues, if they all liue, you haue two hundreth pounds to buy a perpetuall rent, or sometimes as it hath beene, to giue 20 per 100 for the yeare, and so from yeare to yeare, and dying the principall is theirs. One hundreth pounds for eight liues (by equalitie decreasing the pennie eight) is £12 10 for two liues, 112 for three liues, £10 for foure liues, £9 1 9 pence, is £6 5 for eight liues. The citie of Amsterday (Amsterdam) was wont to giue good consideration, and did obserue this order vpon a hundreth guelders:
For eight liues gaue... ...£16 13 4
Of nine liues
Vpon ten liues they gaue
Vpon eleuen liues
19 I O
22 4 5
26 13 4
Vpon twelue liues
£33 6 8
Here you are to remember the obseruations of assurors, whether the persons be young or old, sober in their diet and behauiour, much travelling abroad, or staying at home, subject to sickenesse, and the like considerations.
Monies deliuered vpon annuities for rents, seeme more reasonable than pensions vpon liues, because you beare onely the aduenture of the decay of houses or destruction of them in time of warre: and much more should bee giuen without pawne, than pawne or morgage.
It is commodious for a man, hauing waste grounds and intending to build vpon them, to take much money vpon rent after 6 pro cent. which many cities giue continually to increase their wealth and inhabitants. And because the valuation of their money doth often alter and is inhaunced, whereby all things become deerer, the parties are aduised to haue their rents paid in specie, in Crownes, Dollers, Ducats to be paied as formerly they were currant; the dangers in times of wars causeth rents to decrease, for the ancient rent is alwaies first to be paid, although all others be losers.
In 1624 the legal rate of int. in England was reduced from 10 to 8 per cent.; and remained at this latter rate until 1651.
It seems doubtful whether any tables for valuing annuities existed before the early part of the 17th century. About 1620, William Webster published his tables of simple int. and also "His Tables of Compound Int., with true Valuations of Annuities, Leases, Fines, and Reversions," 2nd ed. 1629. These tables, however, and the values deduced from them, are all for fixed terms of years, and the contingency of life is not even contemplated by them. The same may be said of the tables of Wm. Purser, pub. 1634: Compound Int. and Annuities, containing the art of Decimal Arithmetic; also the Value of Annuities.
In 1651 the Rump Parliament reduced the legal rate of int. from 8 to 6 p.c. This was legitimatized in 1660; and it remained at that rate until 1714.
In 1658 John Newton pub. Table of the Value of Annuities; but again there is no mention of Life Annuities.
In 1661 H. James Hodder's famous book of arithmetic was first pub., and therein was "A very brief and necessary table to find out the present worth of the annuity, or yearly rent for 21 years or under, after the rate of 6 p.c. p.a."
In 1669 a "second impression" of Roger Clavell's Tabule Fæneratoria was pub., in which was contained: Tables for the forbearance, discompt, and purchase of annuities to 31 years, at the rate of 6 p.c. p.a., according to the late Act of Parl. Still not a word on the subject of Life Annuities!
In the middle of the 17th century, Pascal, Fermat, and Huygens laid the foundation of the mathematical theory of probabilities, which even in its first crude stages was of great service in the investigation of life contingencies; and about the same time John Wallis, an Englishman, pub. a treatise on Algebra, which also had to play an important part in the practical development of the last-named science. Huygens' tract, which appeared in 1658, was the first systematic treatise on the Doctrine of Chances which had been pub. : the doctrine of chances taught us how to estimate life contingencies: the science of life contingencies enabled us to measure the value of life annuities.
The mention of some of the preceding names carries our minds at once to the continent of Europe, whither we must pursue the subject, well assured that our enterprise will bring an abundant reward.
On the 25th April, 1671, it was resolved by the States General of Holland to negociate funds through the medium of Life Annuities. On the 30th July following the resolution was confirmed; and on that same day was presented to the Assembly a report by the Grand Pensionary, John De Wit, explaining the basis upon which such an enterprise could be successfully carried out. This event constitutes an important epoch in the hist. of Life Annuities. We have, however, no time to dwell upon the circumstance: we must approach the report itself:
Noble and Mighty Lords.-In so extensive an administration as that of the united country of Holland and West Friesland, it is better, as I have several times stated to your lordships, for several reasons perfectly well known to you, to negociate funds by Life Annuities, which from their nature are infallibly terminable, than to obtain them at int. which is perpetual, or by redeemable annuities; and that it is likewise more useful for private families who understand economy well, and know how to make a good employment of their surplus in augmenting their capital, to improve their money by life annuities than to invest it in redeemable annuities, or at int. at the rate of 4 p.c. p.a.; because the above-mentioned life annuities, which are sold even at the present time at 14 years' purchase, pay in fact much more in proportion than redeemable annuities at 25 years' purchase. I have consequently respectfully to submit