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among 4,150 claimants. The cost of each policy at this date (1774) was 6s. 6d., by reason of an increased stamp duty.
In 1775 Mr. Charles Brand, who had then become the registrar of the So., pub. A Treatise on Assu. and Annuities, with several objections against Dr. Price's observations on the Amicable So. and others, etc. Confining ourselves here to his answers concerning the Amicable, we shall note them as briefly as possible.
The So. never was intended for the benefit of a person of the age of 12; nor could it be any advantage to a person of that age to become concerned in a scheme of that kind. The prob. of the ages of persons who are supposed to apply to this So. are those between 20 and 40; therefore not so much difference in the real value of the age, as the goodness of the life is particularly attended to upon admission, as it draws near to the limited age.
That this had not always been the practice of the So. may be gathered from his remarks in another part of his vol., viz. :
Had the So. for Equitable Assu. on lives experienced the losses which have been sustained by the Amicable So., a very little time would have declared them unable to perform their undertakings, unless by a recourse to those calls mentioned in their D. of Sett.; which were they necessitated to do, they would find it not only injure the credit and reputation of the so. but even subvert its constitution, by the refusal of those who would be found liable to the payment of such calls, notwithstanding all the arguments the Doctor might have in his power to advance for their support.
He sums up his answers to the learned Doctor in these terms:
To these several objections I beg to add, that it plainly appears Dr. Price has not only misunderstood the constitution and intention of this So., but likewise made several objections against it which are of themselves contradictory, and intended to mislead those who might not have either leisure or inclination to examine them.
The Amicable So. was founded upon that very laudable principle of making a proper provision for a family which might suddenly be deprived of its support; and has been experienced to have answered the intent by the surprising dividends made for the several years past; owing to the care which has been taken by the directors in supplying the vacant numbers with such good lives as continue in the So. upon an average of 16 years (and where the proportion of the life of a woman compared to that of a man may be computed). This judicious conduct in the management of the So.'s affairs has brought it to such an estab. as not to be shaken, but by a gross alteration of its principles; and it is not to be doubted but that in a few years longer under such directions the So. will arrive to the complement prescribed by the orig. charter, when such numbers as may afterwards become vacant will bear very high prems.
Some of his remarks we shall notice more at large under FEMALE LIVES and SELECTION. In 1778 there was pub. by Mr. Brand: A Table of the Durations of Lives in the Corp. of the Amicable So. for a Perpetual Assu. Office. See AMICABLE SO. MORT. Experience. The orig. plan of the So. has been subjected to a good deal of criticism. We propose to record the observations of a few of the leading authorities; and it will accord better with our plan to take them in their chronological order.
One of the earliest writers who drew attention to the defective constitution of this So. was a non-professional one-Mr. Weskett, a city merchant and writer on Marine Ins. He said (1781):
It is obvious that regulating the dividends among the nominees by the number of members who die every year is not equitable; because it makes the benefit which a member is to receive to depend, not on the value of his contribution, but on a contingency; that is, the number of members that shall happen to die the same year with him.
He also pointed out that the regulation was disadvantageous to the So. itself, and showed how and why, in which we need not follow him now.
On the occasion of the promoters of the Westminster So. applying to Parl. for an act of incorp. in 1789, this So. opposed the Bill, and employed counsel for the purpose. [LIFE INS., HIST. OF.]
In 1790 (30 Geo. III.) an additional charter (the 3rd) was obtained, which recites that the So. is desirous of extending its plan, for the benefit of those who might thereafter be admitted members. Permission was therefore given as follows: The number of members might be extended so as not to exceed 4000 in the whole. New members to pay £7 10s. each on admission, and the £6 4s. ann. subs. As former members died out, the new members were to take up the orig. 2000 shares in the order of the admission of such new members. There then follows this important modification: £5, part of the £6 4s. ann.. contribution of all the members, is to be divided upon death; the remainder with improvements at interest, to be reserved. Members joining at the later quarters of each year must pay the back quarters. Registrar was to be paid an increased salary according to increased number of members.
At this date the accumulated funds of the So. reached the sum of £64,300, in 3 p.c. annu., together with some property in houses. Out of this amount the sum of £30,000 stock was appropriated in aid of the future mortuary dividends.
After the changes of this year a similar rise in the div. occurred from the admission of so many new members to that which occurred after the changes of 1770; but these effects were temporary only. The increase of members brought the increase of liability; but those who died in the interregnum were benefited. In these instances the So. operated like a tontine reversed. Those who died earliest gained the most.
In 1807 (48 Geo. III.) a new charter was obtained which in a great measure remodelled the working, without changing the constitution of the So. It obtained power by means of this charter to admit into the said body corp. any number of persons to be members
thereof, and contributors thereto, for so many shares upon the life of each person, and upon such greater or smaller payments, by way of prem. and ann. contribution for each share, according to the age and other circumstances of the person so to be admitted, and the conditions of their respective pol., as the said So. should, by bye-laws, rules, or orders, to be made in the general courts thereof, direct, order, or appoint, so that no greater number of persons should be members of the said So., or any greater number of shares be existing, than 8,000 members or shares, at one and the same time. The So. was further authorized to grant annuities in lieu of payment of claims, and to purchase pol. for surrender, etc.
The number of shares to be granted to any one member was afterwards fixed by a general court at 12. It was also resolved to admit members between the ages of 8 and 67, at graduated rates; and the entrance fee was considerably reduced, and also graduated according to age. The whole of the ann. contributions for every share granted previous to this charter, and seven-eighths of the contributions on shares subsequently granted, were to be divided every year amongst the claimants by deaths, which happened in that year; and the corp. then engaged that each share, although it might be more, should not produce less than 180.
The following is an abstract of the table of entrance money and ann. rates then adopted: Age. Prem. on Admission. Ann. Payments. Age. Prem. on Admission. Ann. Payments. 15........ £I II 6.........£3 10 6 45..... £29 0. £7 7 O
The payments were to be made half-yearly; the first at the time of admission. It appears to have been provided that the reserve fund necessary for the security of the guarantee of £180 p. share should be improved for the benefit of all the members according to their respective interests; and that no division of the cap. was to be made without the consent of two successive general courts of the members of the corp. But the So. became enabled to effect ins. for any number of years, or on the joint continuance of lives, or on survivorships, or any other contingency of life.
About 1811 Mr. John Pensam, the then registrar, compiled from the books of the So. its mort. experience, which was found to be more favourable than that shown by the Northampton Table. [AMICABLE SO. MORT. EXPERIENCE.] Mr. Francis Baily, writing of the So. at this date, speaks of its plan as being in many respects exceedingly defective, absurd, and inequitable.
In 1823 (4 Geo. IV.) the So. obtained an add, charter—the 5th-authorizing an increase in the shares, from 8000 to 16,000.
In 1825 Mr. Babbage wrote-referring to the regulations of 1807 :
This So. used to divide seven-eighths of the annual payments of the members amongst those who died in the course of the year; but this arrangement having caused considerable inequalities, they have recently taken an average of five years.
In 1836 (6 Wm. IV.) the So. obained an add. charter-the 6th and last-extending the number of shares to 32,000. This charter contained (inter alia) some important provisions regarding valuation and dividends. The actual div. for every share which should become a claim was increased to £200, and the So. was empowered to effect ins. for specified sums on joint lives, or on the life of the last survivor of two or more persons, etc.
In 1837 at a general court held 29th Nov., all the former bye-laws were repealed, and 53 new ones were enacted to meet the requirements of the new charter.
Prof. De Morgan, writing of the So. in 1838, described it as founded rather upon principles of mut. benevolence than mut. ins. as understood at a later period.
In 1841 there was pub. :
Tables of Mort. deduced from the Experience of the Amicable So, for a Perpetual Assu., during a period of 33 years ending April 5, 1841. To which are added comparisons of the mean duration and probabilities of life according to the Amicable So. experience, with some other tables. By Thomas Galloway, M.A., etc., Registrar of the So. Printed for the use of the members of the So. by order of the court of directors. [AMICABLE SO., MORT. EXPERIENCE of.]
Farren, in his Historical Essay on Life Contingencies, 1844, says:
From the above details it is obvious that such regulations did not constitute a Life Assu. Asso. in the modern meaning of the term, but rather what may be called a mortuary-tontine, in which an annual produce was to be divisible among the nominees of the deceased in place of among the survivors, as in ordinary tontine cases. The denomination " perpetual assu. office" was probably, therefore, simply employed in a legal sense to signify that the destined 2000 original contracts or nominee shares, in place of becoming finally cancelled by death, would, like land or real estate, be perpetually "assured" or "conveyed" to various successors.
In 1845 the So. obtained a special Act of Parl., 8 & 9 Vict., c. viii., "An Act to enable the corp. to lend money upon mortgage for the purpose of investment, and also to confer other powers upon the said So." Of these other powers, the most important were connected with the mode of transacting business, valuations, and the division of profits, viz. The profits or loss to be taken upon an average of seven years until 1852, and to be continued thereafter at the like periods. Assu. might be effected on single lives for
specified sums, provided that no person should, in respect of any such assu., be or become a member of the said So. A bonus fund to be estab., that is, the representatives of persons assu. might receive in lieu of the actual div. the guaranteed sum of £200 for every share comprised therein, and also add. sums to be periodically added by way of bonus to the account of such guaranteed sum.
Mr. W. T. Thomson has already pointed out (1856) that by means of the new charter of 1836, and the last-named Act, the So. became an ins. office "very nearly on the usual plan."
In 1854 the So. obtained another special Act, 17 & 18 Vict., c. xii., containing add. powers for the purposes of investment.
The accounts of the So. on the 4th April, 1854, showed the following to be its financial position :
Present value of ann. contributions on the various classes of policies, viz. :
1. Single lives
ins. for whole term with profits
4. Joint lives and contingencies ...
Values of securities and investments...
£624,743 13 2
3,186 14 2
641,560 O II
774,245 3 9
Without entering into details of the changes in plan which about a century and a half of time necessitated, the account of its estab. as given by the Amicable on the occasion just referred to (1719-20), is sufficient to show that on its orig. formation it was not a life ins. so., but a benefit inst. for the creation of a corp. purse, by means of the contributions of members, all subscribing a like sum, and settled portions of the contents of which purse were to be divided from year to year, and in equal proportion between the representatives of those contributors who might happen to die within each business year for the time being.-Assu. Mag. iv. p. 301.
Notwithstanding the increased Parl. powers, the So. made no progress-indeed, it was retrograding. Its day had gone by, and the managers were among the first to discern the fact. Instead, therefore, of a protracted dissolution, the modern idea of an amalg. was put forward and embraced. Negociations were in 1864 opened with the Economic, and they so far matured that a bill was laid before Parl. seeking the proper authority.
In this said bill the following statements regarding the position of the So. were contained (inter alia):
That the subsisting pols. granted by the So. were of three classes, one entitling the holder to a dividend according to the said recited charters; another entitling the holder to a bonus according to the recited Act of 1845; and the third entitling the holder to a fixed sum, without participation in the profits; and the first class were usually distinguished by the term "charter policies," the second by the term "bonus policies," and the third by the term "policies for specified sums." That the total value of the liabilities of the said Amicable So. by virtue of its said several policies on the 1st day of September, 1863, was the sum of £604,500. That with the exception of the said pol. and the unpaid claims on policies on lives now deceased, and the current expenses of its office, and certain small payments to retired officers, the individual liabilities (if any) of the So. were of insignificant amount. That the total value of the funds and property or assets of the So. on the said 1st day of September, 1863, amounted to the sum of £625,000 and upwards. That the bus. of the said Amicable So. had of late years greatly decreased, principally from the constitution of the So., which from its mode of assessing dividends on the said charter pol. and the restricted amount of bonus which it could declare upon its bonus pol., placed it at a disadvantage in the eyes of the public with other offices established on a more modern and less fettered system.
This last was a candid admission, but it was true. The arrangement with the Economic was not carried through, and we could well appreciate the observation of the N. Y. Ins. Superintendent in his next official report: "We on this side of the Atlantic, out of regard for the general interests of Life Ins. in both hemispheres, may well ask that such a venerable monument of the permanence and perpetuity of the system should be allowed to remain undisturbed." The prayer was not to be granted.
Shortly afterwards negociations were opened up with the Norwich Union Life. These matured into a scheme which was laid before Parl. and received its sanction and authority by means of 29 & 30 Vict., c. cxxxv. The terms of arrangement, as embodied in this Act, are as follows:
It is recited that the profits of the Amicable did not admit of the payment of £250 on every share; that the amount of each share under the charter-policies had on the average of 25 years subsequent to 1841 averaged £223 135. 2d. Also that the system of the Amicable was orig. estab. 160 years ago, "as the first experiment in life assu., and therefore in the absence of all experience of the principles upon
which it ought to be conducted, it has been found impossible to adopt the peculiar system of the Amicable to the system upon which life ins. is now ordinarily conducted." It further recited that no policy-holder of the Amicable had a right to require the directors to undertake any new business of life assu.; that the assets were more than sufficient to meet the eventual liabilities. That the yearly expenses of the So. exceeded £3200. That the number of Amicable policy-holders was 994, insured for £1,146,900, of whom 894 ins. for £1,010, 180, had approved proposed arrangement. Of the remaining 100 policy-holders, 86 had not dissented, 4 were neutral, and 7 dissentient. The agreement provided that the whole of the assets of the Amicable should be appropriated for meeting claims under Amicable policies, less only the sum of £1200 per ann. contributed towards management. The Amicable was not to undertake any new bus. The funds of the Norwich were to be liable for Amicable pols.; charter pols, being paid at £227 p. share. The Norwich So. to take over funds of the Amicable, which latter to be formally dissolved. Compensation of officers of Amicable provided for.
Adopting the language of Mr. Farren in the foregoing account of the Amicable So., it may be seen "by what gradual means the important system of pecuniary provision against the evils of premature death was being estab. Without observance of the distinction of age; without any definite notion as to the value of each nominee's expectant share of the mortuary dividend-yet an assembly of private individuals as early as 1705-6 considerately felt that if the general notions as to the tenure of life admitted of being acted on to provide an annuity for an individual himself, so pecuniary matters might be equally arranged to provide support for such members of his family as might eventually survive him." The So. so constituted lasted for 161 years. It was essentially a thing of the past; but its hist. cannot fail to be of interest to all succeeding generations. AMICABLE SO., MORTALITY EXPERIENCE OF.-The mortality experience of this So. has been separately pub. on three distinct occasions, each of which we must pass under review. Under date 1st Dec., 1778, Mr. Charles Brand, the then registrar, compiled the experience of the So., giving the following as his reasons for so doing:
The variety of tables of observations on the bills of mort. for different places, and the different sums they gave when applied to value annuities from, first induced me to consider some method to take an actual duration of lives, from a register of experienced facts: I therefore applied myself to the books of the Amicable So. and extracted from thence the date of the admission of every member on whom a claim had been made, the age when admitted, and the day on which the member died. I likewise computed the time each member lived, and arranged them according to their respective ages, the totals and averages whereof have produced the result contained in the above table of durations.
The table of expectancy of life is formed by appropriating that share of life which each member would have enjoyed, had all the members of the succeeding ages been admitted, when at the given age; and had there been a greater number of instances in the earlier or later periods of life, I should not have combined them, but given them distinct and separate, according to their ages; yet I hope I have obtained such a number of facts as will give a foundation for fixing the value of annuities on the lives of those individuals who may be supposed "to have no disorder which may tend to the shortening of their days."
There are tables of observations on bills of mort. which have been communicated to the public by two very ingenious mathematicians, Dr. Halley and Mr. Simpson; the former gives a calculation, founded upon five years' observation on the bills of mort. for Breslau; the latter upon ten years' observations on the bills of mort. for Lond.; both authors being, however, very sensible how defective those bills were, they only gave them as the best from whence any conclusions could have then been drawn. We have likewise been favoured, in Monsieur de Buffon's Natural History, with tables formed from the observations of Monsieur du Pre de St. Maur, of the French Academy, and there pub. by his authority; they comprehended the observations on three parishes in Paris and twelve in the country; those combined give expectations of lives which to a fraction correspond with the above table, until the ages of 52, etc., and the difference then arises from the want of a sufficient number of instances to continue the usual decrements of life, which the nature of this institution would not admit of; but notwithstanding these corresponding circumstances, the tables of observations on bills of mort. ought to give an expectancy of life much less than a register of lives collected with care and attention. Because such bills must contain the deaths of those who were debilitated (in number not ascertained); when they give a greater, they are apparently defective, and therefore ought not to be too implicitly relied on.
Mr. de Moivre in his book on the Doctrine of Chances, strongly recommends a register to be taken of individuals, ascertaining their ages and occupations, in order to deduce from thence some more certain grounds to obviate those difficulties, which have but too justly been attributed to the imperfect and chimerical returns made as general bills of mort. Having in a great measure complied with his wish, by here giving the result of a register of 3826 persons who have been members of a public inst., I shall, as soon as other engagements will permit me, proceed to form a complete set of tables for the value of annuities, attending at the same time to that particular risque and contingency annexed to those in early life.
Here is Mr. Brand's Table of "Durations," which possesses great interest on account of its being the first "Experience" Table ever compiled.
A Table of the Duration of Lives in the corp. of the Amicable So. for a perpetual Assu. Office from the institution of the So. (in 1706) to the year 1777, both inclusive, being upwards of 72 years.
• There being but few lives at these ages, it became necessary to combine them to form proper averages.
About 1811 Mr. John Pensam, the then registrar of the So., took out of its books such a statement concerning the lives ins. as to constitute, in some sort, a Life Table. That statement was never pub., but its compiler used it to test the experience of the So. against the Northampton Table. The result was in favour of the Amicable lives, which Mr. Pensam said he attributed very much to the benefit of selection. Not, however, to medical selection, of which the So. did not avail itself in the earlier part of its hist.
In 1841 Mr. Galloway, the then registrar of the So., for the "use of members," pub. its experience, and also furnished in detail the data on which it was based. The observations extended over a period of thirty-three years, from the reconstruction of the So. in 1808 to the 5th April, 1841. Three determinations of the law of mortality were included in these observations. The first, grounded on the duration of the lives of those members only who had been admitted into the So. since the beginning of 1808, upon insurances on single lives for the whole period of life. The second, on the duration of the lives of those members who, having been admitted in previous years, formed the old So., on the 5th April, 1808; and the third, on the combined data furnished by both classes. The first of these determinations was prescribed by the So.'s 6th Charter, which directed that the ann. valuations required for ascertaining the amount of the dividend to be paid on claims, by the deaths of members, shall be made from a table of mort., deduced from the experience of the So. itself during a specified period of time; and the second and third were subsequently undertaken for the purpose of rendering the investigation com. plete, by including in it the total experience of the So. since 1808. Mr. Galloway says: In collecting the materials for these tables great pains were taken to insure the most scrupulous accuracy. In the early part of the period over which the observation extends the office registers were not arranged with a view to the present investigation, and a large proportion of the members were assured in more than one policy, while the record of the second assu. did not always contain a reference to the first, much difficulty was experienced in ascertaining the exact number of persons who had stood the chances of life in the So. After repeated comparisons of different sets of books, and reference to the money accounts in all cases of discrepancy, a list, correct (I believe) in every respect, was at length prepared, containing the following particulars-1. The name of each individual on whose life an assu, was effected for the first time; 2. His office age at admission; 3. The date of his admission; 4. The date of his death, or discontinuance, if not living, in the So. on the 5th April, 1841, which are all the data required for the construction of the tables. The ages at admission were certified by extracts from baptismal registers or by affidavits, and the dates were carefully checked. In estimating the relative value of the results brought out, the accuracy and certainty of the data may perhaps be regarded as compensating in some degree the smallness of their number.-Intro.
The question of persons, and not policies, being thus set at rest, the next point to notice is the method of reckoning the ages. The plan adopted was to consider that each member on admission had completed exactly the half of his current year; but a subsequent test showed each member to be about two months older than is assumed at admission, discontinuation, or death in the tables.
The data so obtained was arranged on the plan adopted by Mr. W. Morgan for the Equitable Experience. By this disposition of the materials (continues Mr. Galloway) a distinct and complete view is given of the duration of the lives, and of the assu. of each class separately, as well as of the whole taken collectively; in short, a separate determination of mortality is made for each age of admission, whereby considerable light is thrown on various questions having an important practical bearing on the general subject of life assu.; such, for example, as the effects of selection at the different ages. But he adds, "It is true that the materials from which the present table is constructed are much too scanty to allow of its indications being safely adopted for the solution of such questions." Subsequent similar valuations were to be made every ten years, but we have no records of any others.
The number of members admitted between 5th April, 1808, and 5th April, 1841, was 3,530; of whom, 505 discontinued their policies, and 798 died, leaving 2,227 surviving at the last-named date. Of the members prior to 5th April, 1808, living after that date, there were 1,088; of whom, 994 died, 30 discontinued their policies, and 64 still survived
• When the So. was first instituted, and until the year 1732, the ages of those who became members were not limited (as they now are) to between 12 and 45; but many instances happened afterwards, by exchanging older for younger members, for those above the age of 45.
There being but few lives of these ages, it became necessary to combine them to form proper averages.