CO129-346 - Governor Sir Lugard - 1908 [1-3] — Page 170

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of solvency, that to do so not only kills struggling companies which would otherwise have pulled through but it discourages the rest from strengthening is Their reserves in the way that English companies have done, and that in deciding whether a company should be wound up the Court should be left free to decide the basis on which the valuation should be made according to the mortality actually experienced and the rate of interest actually earned. There is a great deal to be said for the last objection but there is one important point which the objectors omit to notice. It no doubt is the case that in the East Insurance Companies can

earn 6, 7 and 8 per cent, but are their investments of that high order of security to which insurance companies should confine themselves? In such a business, where the

repayments are deferred for so many years, in which the

savings intended for the widows and orphans ere so

largely invested (or such of them as are not sunk in brewery shares), security should come first and profits second. In valuing an Eastern Company it would then be

only reasonable to make some allowance for possible loss

on securities, and the adoption of a rate of interest

below that earned has this result. At the same time, I

think that it would be better to leave the mortality

table and the rate of interest to be used to the dis-

cretion of the Court after consideration of the

character of the company's business.

10.

B. The minor objections chiefly relate to details of the schedules. As the forms in the schedules can be

altered by the Governor in Council it will be very easy

to