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Mr. Hine, contrasting the results of this table and the Pennsylvania Tables of 1814, with that of 1789, says:
It will be noticed from these figures that the most marked improvement has taken place in young life. The lapse of time has acclimated the American nation; has increased the efficiency of medical and sanitary science, and the volume of national wealth has secured greater protection and care to the American youth. From 40 onwards the last century go hand in hand, the sturdy forefathers living out their full term of years, sustained by their hardy constitutions; the descendants of the third and fourth generations preserving through the refinement of the age the longevity of the past.
In May, 1859, a general convention of life underwriters was held in N.Y. for the purpose of exchanging views and devising means for collecting statistical information. The committee on vital statistics, composed of some of the leading actuaries, was appointed, one of its purposes being the preparation of a table of mort. based on the experience of American Life Ins. This committee met just one year afterwards (May, 1860), and reported progress. Has anything since been done?
In 1865 Professor Elizur Wright prepared for the Ins. Commissioners of Massachusetts, of whom he was and had been one of the chief for many years, a table gathered from the experience of all the American offices up.to that date. We have not that table at hand, but shall prob. have an opportunity of dealing with it hereafter. The table used for the State valuations in Massachusetts is the EXPERIENCE (Old) with int. at 4 p.c.
The following note will furnish an outline of the results of Prof. Wright's table:
The mortuary experience of 14 cos., reported to the Commissioners of the State of Massachusetts, which was equal to about 50,000 years of life, prove that life in the U.S., at ages between 31 and 55, is not subject to as high rate of mortality as similar returns prove it to be in Gt. Brit, and Germany. It was also shown, by facts in possession of the cos., that at middle ages, life is subject to a lower rate of mort. in the States than in Europe; while, at the two extremes, at younger and older ages, it is the
In 1866 the experience of the Mutual Benefit of New Jersey was brought down to that date.
AMERICAN EXPERIENCE (1868)—HOMANS' TABLE (No. 2).-Soon after 1864 Mr. Homans again made an investigation into the affairs of the Mutual, which now covered an experience of 20 years. The results of this investigation, we believe, have not been made public in the same manner as the former ones. In the absence of such exact details, we gladly avail ourselves of some observations of Professor C. F. McCay (Spectator, July, 1870):
As this co. was growing rapidly, each new period of five years doubled its experience. The deaths were now more numerous than at Carlisle; they were reported with more accuracy; the numbers of the living and the dying were both more reliable; and the table obtained from the observations was constructed with more ability and skill by Mr. Homans than by Mr. Milne. It thus surpassed the Carlisle in every particular. Compared with Dr. Farr's, it was founded on fewer observations, but these were on ins. lives, and not on the general pop.; which made it more valuable for the uses of a life co. If we compare it with the Actuaries' [OLD EXPERIENCE], it had two advantages. It was founded on American experience, and not on policies, but on lives. The disadvantages were, however, serious; the observations were fewer, and the duration of the ins. shorter; and to weigh these properly, we will consider the two tables carefully, and examine particularly the grounds on which they may claim our confidence.
We shall have occasion to notice some of Mr. McCay's criticisms hereafter.
The table referred to by Professor McCay is the new table of Mr. Homans, first made public in 1868, after it had received all the careful consideration, adjustment, and elaboration, which its talented author had, alike by study and experience, qualified himself to bestow upon it. It will be seen that the expectation shown by this table differs somewhat materially from that shown by the table of 1859. Here is the new table : AMERICAN MORT. TABLE-HOMANS, Numbers Numbers Expectation
Numbers Numbers Expectation living. dying.
86,160 719 36.03
81,090 737 31.07
89,751 719 39'49
accomplished was by the legislature of the State of N. Y. making it the standard for their State valuations. To this end the Ins. Law of 1853 and 1866 was amended by the add. of various provisions, of which the following only are material for our present purpose:
SEC. 13. It shall be the duty of the Superintendent of the Ins. Department to arrange the information contained in the statements required in the last section in a tabular form, or in abstracts, and to prepare the same for printing in his annual report to the legislature. It shall also be the duty of the said Superintendent, at least once in every five years, and ann, in his discretion, to make valuations of all the outstanding policies, additions thereto, unpaid dividends, and all other obligations of every American L. Ins. Co. transacting bus. in this State; and for the purposes of such valuations, and for making special examinations under the 17th section of this act, and for valuing registered life and other policies under chapter 708 of the laws of 1867, the rate of int. assumed shall be four and a half p.c. p.a. and the rate of mort, shall be that established by the American Experience Table, in which table the expectation of life and the numbers of living and dying at each age from ten to ninety-five out of one hundred thousand persons living at age ten, are as stated in the schedule hereto annexed. The Superintendent may, in his discretion, vary the above standards of int. and mort. in cases of cos. from foreign countries, and in particular cases of invalid lives or other extra hazards. The superintendent may also, in his discretion, value policies in groups, use approximate averages for fractions of a year and otherwise, and calculate values by the net, the actual, or the gross premiums or otherwise, deducting in cases of gross valuations, from the gross value of future premiums, one-sixth thereof for future expenses and contingencies.
The act was passed 6th May, 1868, and took effect immediately. The former standard of valuation in that State had been the ENGLISH TABLE, with 5 p.c. int. Since the adoption of the AMERICAN EXPERIENCE TABLE by the State of N. Y., the States of MICHIGAN and MISSOURI had adopted it, each in 1869.
The individual offices were not called upon by this act of the legislature, or any other, to alter their tables of rates, etc. They may still, for their own purposes, retain or adopt any table they please for their internal working; but all their operations will be from time to time measured by the AMERICAN EXPERIENCE TABLE. Some of the offices have already adopted the table. The Ins. Commissioners of Massachusetts have not yet adopted it; but it has been under their consideration. A belief is entertained in many quarters that it will ultimately become the National Standard Table of the U.S. The elaborate tables of the N. Y. Ins. Department [ACTUARIAL TABLES] are all based upon it. On the subject of these tables issued by the department, as also on the adoption of Mr. Homans' table by the State Legislature, the following passage from a circular from the then Superintendent, Hon. Wm. Barnes, should be preserved; the more so as it is the only utterance of his upon the latter question which we can recall:
To persons experienced in the construction of tables of this nature, it is entirely unnecessary to speak of the many elements of error which perpetually gravitate towards the printed page. More than ordinary precautions to insure accuracy have been taken in the preparation, printing and electrotyping of these tables. The herculean nature of the work must be apparent to any one, but more especially so to the mathematician and actuarial expert. The actual results in net values according to the new standard of int. and mort. adopted in this State are especially gratifying; and the “American Experience" at four and a half p.c. int. will commend itself to officers, act., cos., and legislatures, as the most practical and best standard yet compiled for the various purposes of life ins. Whenever American experience shall have been more thoroughly tested by our cos, having reached their maximum and decline, it may be advisable to recollate and tabulate the statistics of all of them; but this period is too remote for present purposes.
This table of Mr. Homans, as was to be expected, has been the subject of a great deal of criticism by American actuaries. Professor Wright has said of it:
I think the rate of mort. Mr. Homans proposes is somewhat better gradulated than Dr. Farr's table. It is free from some of the imperfections and anomalies of that scale; but the general effect of it is to reduce the initial value and to make the grade of the self-ins. a little steeper. The gradulation is hardly as perfect, I think, as that of the Actuaries' scale, though I have not examined it sufficiently to test that point. I have examined it for only one rate of interest-4 per cent., and with regard to a limited number of single prems., a few endows., and ordinary life prems. I think it preferable to the Carlisle table, and preferable to Dr. Farr's; but for some of the ages, I think it is affected with the peculiar experience of the Mutual Life Co. which we all know was estab. by a subs. of policies to be ins., including rather advanced lives and a good many not very good risks; so that the losses, for the first fifteen years, as compared with the expectation by the Carlisle Table, over the age of 54, were in excess; whereas, taking all the lives together, they did not lose so much as was to be expected by that
Again, and on a separate occasion :
That standard is what Mr. Homans calls "American mortality;" but I presume it is derived chiefly from the experience of the Mutual Life, so far as it is not purely hypothetical. That has been adopted as the standard for valuation in the State of N.Y., together with a rate of int. of four and a half p.c. The principal change affecting the value of policies is the half p.c. add. int. The mort. being a little more favourable, brings the values down somewhat more than the English; but as the rate of int. is reduced only one-half p.c. instead of one p.c., it does not produce so great a change as the former rule, Dr. Farr's rate of mort. with five p.c. int. It makes a pretty important change in paid-up insurance, reducing the value about ten p.c.
Mr. White says:
Unless I am misinformed, the table prepared by Mr. Homans covers really an experience from 20 to 74 only in his own co., and the numbers down to to and up to 95, are run out on what he calls "general principles," and not actual from experience; and inasmuch as they do not agree with Farr's or with the Carlisle table on these older ages, it would seem probable that the "general principles" have led him into an error in regard to those ages. One thing more. All these tables, so far as I have observed them, seem to run the duration of life up to 103 or 105, which is in accordance with the experience shown by our own census tables; but Mr. Homans' table runs them all out at 95, and leaves none living, making the duration of life apparently 8 or 10 years less.
Prof. McCay (Spectator, July, 1870) says:
Mr. Homans' American Table has been much esteemed. It has been adopted by many life cos. not only for the prems., but for the valuation of pol. and the distribution of surplus profits; .. and as American experience is attractive, and the actual experience of large and ancient life offices form the very best basis for the future expectation of mort. among the lives ins. by our cos., this table presents great claims to the favour and approval of American actuaries. It is well adjusted, admirably constructed, and has added much to the reputation of the distinguished act. of the Mutual of N.Y. With all these recommendations in its favour, it is nevertheless the duty of every one to consider its claims with fairness and impartiality.
The learned Prof. then makes a series of comparisons between this and other tables, of which we shall avail ourselves in speaking of some of those tables. He says down to 1858 the oldest life ins. in the Mutual office was only in his 78th year; and the number over 65 was less than seventy.
Referring to this table running out at age 95, he says:
In almost every table there are some survivors after the age of 95. Out of 100,000 at 10, the Actuaries has 37; Dr. Farr has 155; and the Carlisle 356; but Mr. Homans has none. At the age of 77 his rate is below the Actuaries'; five years later it is 5 p.c. higher; ten years later the excess is 25 p.c.; and 15 years later it is 57 p.c. At 77 it is 3 p.c. below Dr. Farr's, at 82 it is 7 p.c. above; at 87 it is 37 p.c. higher, and at 92 more than a 100 p.c. higher. At 76 it is below the Carlisle; at 81 it is 14 p.c. higher; at 86 the excess is 37 p.c.; and at 91, 87 p.c. The rapid progress from the age of 75 upwards is even in excess of the Old Northampton, and of every other good table; and as the Mutual Life could not have had more than 4 or 5 deaths at these higher ages, it is difficult to guess where Mr. Homans could have obtained any authority for these high rates at the older periods of life. There is nothing in the mortuary reports of our cities that justify them; and the private experience of almost every one will tell him that some of his acquaintances have lived beyond 96, which is the extreme of human life according to this American table.
Mr. D. P. Fackler thus spoke of it at the National Ins. Convention, 1871 :
The differences between rates and valuations on the American Experience Table, and the same on the Actuaries', are quite trifling-about as much as the variations that would be due to a difference of one quarter p.c. in the rate of int. I think the American Experience Table is a better index of the mort. of American cos. than the Actuaries', and should be very glad to see it adopted [by the States generally). It should, however, I think, be better graduated so as to correspond to its author's orig ideas. If it were made on a basis of 10 millions of lives instead of 100,000, the graduation would be perfect. As it is now it is quite irregular. There are such differences in the successive results obtained from it that one is often led to think that he has made some considerable error. . . . A table for State purposes ought to be perfectly graduated, so that the numerous tables based on it would be susceptible of check by the method of differences.
Mr. Edwin W. Bryant, one of the most accomplished actuaries in the U.S., and now the actuary of the N.Y. Ins. Department, says:
The table shows a lower rate of mort. than the English (No. 1), or than the Experience table from 30 to 77. At the other ages a higher rate than the last-named table. In this particular it is confirmed by the experience of the Mutual since 1858, as well as before, and by that of several other American
The first complete valuation of all the policies existing on the books of the Life offices transacting bus. in the State of N.Y. was made by the Superintendent of the Ins. Depart ment in 1870. It embraced over 650,000 separate policies in existence at the close of 1869. This was made upon the AMERICAN EXPERIENCE TABLE.
There is one especial feature which remains to be noticed, and it is that in the State
valuations the limits of life are fixed. "In our calculation (said Prof. Wright to the National Ins. Convention, 1871) we cannot admit of any indeterminateness as to the termination of the risk; therefore we assume 100 in Massachusetts, or 96 as the limit in N.Y." In the preface to the new ed. of his table he says, more at large:
The combined experience on Actuaries' rate of mort. assumes that of 100,000 persons living at the age of 10, the last will die in his 99th year. Consequently it is assumed, in calculating the prem., that the claim on any pol. must be paid at the end of that year if not before, notwithstanding that by the terms of the pol. it is not payable till death, and there is no impossibility of a party living some years beyond the age of 100, and paying prems. in each of those years. Hence it will be seen that in the tables [of the department], every whole-life pol. both as to prem. and reserve, is treated precisely as if it were an endowment pol. payable at 100 or previous death.
We don't find that the offices using the Experience Table, in the conduct of their bus. adopt this limit, or those using the American Experience Table the limit of 96; but it would be an excellent thing to do in each case. It is one great drawback to life ins. the encumbering of very advanced age with the payment of prems. Of course there is the annuity aspect of the case to be considered. AMERICAN OFFICES TRADING IN EUROPE.-After several years of "prospecting," the American offices have finally "invaded" Europe. The following is something like the order of their coming. The Germania Life of N.Y. commenced operations in Germany in 1868 or 1869. The Home Fire of N.Y. commenced in Germany and in England towards the close of 1869. The Equitable Life of N. Y. commenced in Ireland and in the North of England early in 1870. The New York Life commenced in Lond. and on the Continent of Europe in April, 1870. The North America Life, and the National Life (of N. Y.), each towards the autumn of 1870. We shall give an outline of each of these offices under its alphabetical title. Several of them are doing a very successful bus., which the recent crusade against them has, by drawing extended attention to their real merits, as against their imaginary demerits, helped to foster. The North America has taken over the Life bus. of the English. The New York Life is in negociation for taking over the entire bus. of the European. It would be a great blessing to the policy-holders to find themselves in such a sound co.
The recent fire at Chicago will involve a loss of something like £400,000 on the Home. The available assets of the Co. on 31st December last, were (including £500,000 of paidup cap.) £900,000. After payment of this loss, the cap. will remain intact; and the proprietors will immediately reinstate a reserve fund of £300,000. This is the way to
deserve and secure confidence.
AMICABLE CONTRIBUTION.—The name under which the Hand-in-Hand was orig, founded in 1696. In 1698 it took its present name.
AMICABLE MUT. LIFE ASSU. So., founded in Dublin in 1867, with a guarantee fund. The advertisement said:
Amongst the many new features of this office the following may be noticed:-Parties can insure cheaper in this society than almost any other; indeed, in many cases a policy for £1250 could be issued for the same prem, as charged by other offices for £1000. Parties insured with this So, know exactly the surrender value of their policies from year to year, without having recourse to the office; and policies may be surrendered after payment of first year's premium. Non-forfeiture of premiums paid. Mr. J. Innes was the founder of the Co.; Mr. Albert J. Deacon the Sec. The bus. was worked in connexion with the Etna Fire. In 1868 its bus. was trans. to the United Ports and General.
AMICABLE So. For a PERPETUAL ASSU. OFFICE.-The formation of this So. dates back to the 24th January, 1705, but it was not until the 25th July, in the following year, that the promoters, the Lord Bishop of Oxford, Sir Thomas Aleyn, Bart., and others, obtained from Queen Anne a charter (granted in the 5th year of her reign) for incorp. them, and their successors, by the name above given, with power to purchase lands, sue and be sued, and to have a common seal.
The preamble to this charter sets forth the objects of its founders very succinctly: ANNE, by the Grace of God, Queen of England, Scotland, France and Ireland, Defender of the Faith, etc.: To all to whom these Presents shall come, Greeting: Whereas Humberstone Baron, John Hartley, William Spenceley, Richard Musgrave and Others, have by their humble petition represented unto Us, That they have agreed upon and entered into a voluntary Society, for the mutual benefit and interest of every person that shall at any time be a Member thereof, in order to provide for their Wives, Children and other relations, after a more easy, certain and advantageous method than any that hath hitherto been thought of, by an Amicable Contribution, according to certain Articles or Agreements entered into by the said Petitioners for the purposes aforesaid. And it has been humbly certified unto us, that their design will be of singular Use and Relief to many Families, by providing for great numbers of Widows and Orphans, who might probably be otherwise left wholly destitute of a maintenance by the sudden death of those on whom they depend. And the said Petitioners have therefore humbly prayed Us to incorporate them and all others that are or shall be concerned in the Society of Perpetual Assurance Office, etc. Now know ye That we being graciously pleased to gratify the said Petitioners in their said request, and to encourage the said undertaking of our especial grace, certain knowledge and mere motion have granted, etc.
Her said Majesty thereby constituted the persons therein named and all other persons who should be admitted to be subs. to the So. therein named, according to the directions thereinafter contained, not exceeding the number therein mentioned, one body corporate and politic in deed and in name, by the name of The Amicable So. for a Perpetual Assu. Office, with perpetual succession and with power to take, purchase, hold, and retain to them and their successors any manors, lands, tenements, rents, hereditaments, goods, and chattels, and, to do and execute all and singular other matters and things necessary relating thereto, and to sue and be sued and to have and use a common seal for the affairs
and business of the said Society, and to grant pol. of assu. under the seal of the said Corp., entitling the nominees of the subscribers or members of the said So. to such dividends as therein mentioned, and to make and raise a joint stock or fund from time to time for the ends and purposes therein mentioned; and by the said Charter it was ordained that the affairs and business of the said Corp. should be ordered, managed, and directed by twelve members of the said So., to be annually elected directors of the said So., in the manner therein prescribed; and at any general court (not consisting of less than twenty members of the said Corp.) it should be lawful for the members there assembled to make byelaws, rules, orders and ordinances for the good government of the said Amicable So. and the members and affairs thereof, and to alter, change, or annul the same, or any of them, so as such bye-laws, rules, orders, and ordinances, should be reasonable, and not repugnant or contrary to the laws or statutes of this realm, or to the prejudice of any other co. or corp.
The number of persons to be incorp. was not to exceed 2,000, but might be less; each person was to receive a pol. under the seal of the Corp. entitling his nominee or assigns to a dividend on his or her decease, in the manner mentioned in the Charter, viz., if there were the full 2,000 members then, one-sixth of the contributions amongst those who so died during the first year. In the second year the sum of £4,000 was to be divided amongst the representatives of the deceased members; in the third year, £6,000; fourth year, £8,000; fifth year, £10,000, and so ever afterwards, with so much more as should be agreed by a general court of members to be held ann. If there were not the full 2,000 members, then the ann. divisions were to be in proportion to the actual numbers. The remainder of the funds, together with interest realized thereon, as also the purchasemoney for annuities sold to the members, was to accumulate for the benefit of the members generally.
The contribution to the funds of the So. was to be £6 4s. p.a. In add. to which the first 2,000 members were each to pay five shillings to the registrar of the So. [HARTLEY, JOHN], and five shillings to the joint stock of the So. All subsequent members were to pay 10s. to the joint stock. Each member was to have one vote at the general courts. Directors were to take oath for the due performance of their trust. They might hold courts when and as often as they thought fit; they might admit or reject members. A register of the members was to be kept, to which all persons interested might have access without fee. In case of death authentic certificates were required to be produced. The So. was not to deal in bills of exchange, or enter upon the business of banking, nor deal in bullion, on penalty of forfeiture of the charter. The patent of the charter was declared valid at law, and was to be construed in the most favourable sense to the So.-contrary to the modern practice of interpreting all conditions and covenants against ins. asso.
The preceding are the chief provisions of the orig. charter; and to insure accuracy we have extracted the same from an authenticated copy. This was the more necessary, as we have not found any previous writer who has taken the trouble to give accurate details of the original plan of this So.
It will be observed that in the foregoing scheme there is no limitation as to age; the contribution being the same from all members-the advantages the same to all who died in any one year. If the deaths were few in any particular year, the sum to be divided would of course produce larger results to each participant. The directors, indeed, had an optional power of admitting or rejecting applicants; and hence they could take into account age, condition of health, etc. But there was this peculiar provision in sec. xii. of the Charter, that subscribers or members might "change their nominees," on delivering up the former policy and paying two shillings for a new one!
All the affairs of the Corp. were to be managed by the court of directors, in accordance with the powers granted by the charter and the bye-laws. The number of directors was never to be less than 12, chosen yearly from among the members within forty days after every 25th day of March. And at least four of the directors of the preceding year were always to remain in office, "if so many shall then inhabit within the bills of mort.," to "instruct the rest of the newly-elected directors in the government and management of the affairs of the said So."
The So. had power to make bye-laws at general courts of not less than twenty members. This power was first exercised in 1707; and some of the matters upon which the orig. charter was silent were regulated by these means. It thus came to be provided that all persons at the time of their admission as members must be between the ages of 12 and 45, and must then appear to be in a good state of health; persons living in the country might be admitted by certificates and affidavits, forms being supplied by the office. Any person might have two or three several ins. (or numbers) on one and the same life, whereby such person "would be entitled to a claim on each number so insured." The registrar of the So. was called upon to find security for £2,000.
Five members of the So. were elected annually to audit the accounts, who were by their . office to inspect every transaction of the So., to examine all vouchers for receipts and payments, and upon oath to lay before the quarterly and annual general courts, the quarterly and annual accounts of the So. Auditors were first appointed in 1708.
The actual plan of working can only be inferred from the foregoing; it would appear to be this: at the end of the fourth year, there being 2,000 members, the sum of 10,000 p.a. was to be divided amongst those who died during the year. This would require the sum of £5 per share or member; the bal. of the contribution being left to accumulate. At this period the ordinary prem. to insure £100 for one year was £5. This rate was