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motion 90 entruglo fa tot vorehung a at srs:d
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COPY.
Shanghai, 25th.
178
? 1907.
43 b
709
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Re Section 24 Page 897. This Section provides that the
Company may be wound up on the application of any policy holder,
if it can be proved that the Company is insolvent, the liabiliti-
-es being ascertained by a net premium valuation at 4 per cent,
based on the "combined experience" or "actuaries" table of
mortality (called rate of mortality in the text). It appears to
me that this section requires considerable amendment.
1.
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It is impossible to lay down the rate of interest which
should be used in making a valuation for solvency among the
Companies doing business in the East. The Sun Life of Canada, for
instance, earned for the period ending December 31st., 1901,
interest at the rate of 44 per cent per annum. The Standard
for the period ending November 1900 earned a rate of interest
3ths., these being the latest figures published in any
British returns. The China Mutual last year earned at the rate
of 6 per cent on the mean fund. It will be seen, therefore,
that it is quite impossible to lay down any fixed rate of
interest suitable to even these three Companies, it being an
axiom that a true rate interest must be employed in valuing for
solvency.
2.
3.
A net premium valuation is no test whatever of solvency.
A Table of Mortality quoted is obsolete and is certainly
never used by English Companies, though it may be by some
American Companies. The object of this section would be effect-
-ed if it read beginning on the seventh line of the section
and the last word "counting (as such) the value of its policies
"on such a basis of valuation as to mortality and interest as
"shall be determined by the registrar in consultation with two
"or more actuaries, taking into consideration the circumstances
of the particular Company".
Re
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