Assurance Companies under some uniform regulation with respect to the registration of their accounts; but the measures proposed have fallen greatly short of the necessities of the case, and their adoption would in some respects probably have done more harm than good. Thus Mr. Cave's proposed Bill of last session contained a clause giving the power to any twenty policyholders to require an inspection of the accounts of any Assurance Company by the Board of Trade, which, if adopted, would most probably have been of much greater advantage to the lawyers than to the public; while the statements of account required to be registered with the Board of Trade would have supplied comparatively little information as to the vital points on which the public most require to be informed.

Any measure with the above object, to be effectual, must be so framed as to provide for the most complete publicity. It ought not to be permitted that any chartered or incorporated Company should levy money from the public for a specific purpose without giving full information as to the manner in which the funds so levied are applied. The public are entitled to protection to this extent at the very least. It will not do to point to the influential and honourable names of directors and trustees, and to ask the public to repose blind confidence in them, while they on their part treat the public with reserve or secresy. Full publicity is the only check upon that tendency to run into carelessness and waste which, as we have seen above, is the characteristic of all bodies of men acting in a corporate capacity.

It is, of course, sufficiently well known that the largest and most thriving of the Assurance Companies in this country are admirably and carefully conducted; and these have nothing to fear from the fullest possible publicity. Nor, we believe, are there any of the best managed Companies but would cheerfully concur in the adoption of any large and well-devised measure, calculated to restore that public confidence in Life Assurance management that recent events have so seriously shaken. And if there be offices whose transactions cannot bear the light, and whose existence might be imperilled by the publication of their accounts in an intelligible form and in full detail, it is better that they should cease to exist than be allowed to carry on their operations at the expense of the public.

There need be no great difficulty in framing a measure which should meet all the necessities of the case. We have, indeed, a sufficient precedent in the accounts which Railway Companies are now compelled to publish annually for the information of their shareholders, according to the forms prescribed by the Act 31 and 32 Vict. cap. 119. Every such annual statement of

accounts:

accounts must be certified by the chairman or deputy-chairman, and by the secretary or accountant of the Company, as well as by the auditors; and, where expenditure on works or plant has been incurred, by the engineer and locomotive superintendent. A printed copy of the accounts is required to be forwarded to the Board of Trade, and must be given on application to every person holding stock or debentures in the Company. Noncompliance with any of these requirements subjects the Company to a penalty of 507.; and if any statement in the accounts is false in any particular to the knowledge of the person who signs the same, such person shall be liable, on conviction thereof on indictment, to fine and imprisonment, or on summary conviction thereof to a penalty not exceeding 501.'*

The same Act also empowers the Board of Trade to appoint inspectors to examine into and report upon the affairs of any Railway Company, on a resolution passed by the Board of Directors, or an application from two-fifths of the holders of ordinary shares or stock, or an application from half the holders of debentures, or two-fifths of the guaranteed or preference stock; but the applicants must show reasonable grounds for requiring such investigation to be made, and give security for payment of the costs of the inquiry. The Act further provides that the report of the inspectors appointed by the Board of Trade shall be printed, and a copy delivered to all persons holding stock or debentures in the company; and that the expenses of the inquiry shall be paid by the persons on whose application the inspectors were appointed, unless the Board of Trade shall otherwise direct. Should the Company itself desire to appoint its own inspectors, without referring the inquiry to the Board of Trade, it is competent for them to do so by resolution of an extraordinary meeting, the inspectors so appointed having the same powers and performing the same duties as if they had been appointed by the Board of Trade.

This law is now in full operation as regards the Railway Companies of the United Kingdom, nor has any difficulty been experienced in complying with its provisions. It may seem hard for Directors to be thus placed under the rigour of the law, and compelled to make public their affairs by fear of penalties; but penalties have no fears for those who act honestly and have nothing to conceal. The most complete publicity and uniformity of railway accounts is thus secured, and shareholders and debenture holders are enabled to watch and compare the transactions of their respective Companies in detail from one year to another.

* The Regulation of Railways Act, 1868, clause 5.

Such

Such a law-no more and no less-is required to ensure a like publicity of the accounts of Life Assurance Companies. Indeed, it is far more necessary in the one case than in the other. Railway Companies do not, like Life Assurance Companies, levy money from the general public, repayable on certain conditions at uncertain periods. The railway shareholder can part with his holding any day, or the debenture holder may call in his loan, and his interest in the Company is at an end. But the Life Assurance Company enters into a contract with the assurer to pay to his survivors, in consideration of certain premiums duly paid, a fixed sum at his death, whenever that event. may happen. Is it not reasonable, is it not just, that the assurer should in the mean time have some such guarantee as the publication of proper accounts would give him, that the money he is year by year paying to the assuring office, it may be with difficulty, is not wasted in expenses of management or fooled away in lation, but is carefully laid by as an assurance fund against the time when his wife and children, for whom he is making thepresent sacrifice, shall require it?

specu

In by far the greater number of cases, the policy-holder has at present no control whatever over the concerns of the Company with which he is assured. It is only in the Mutual Offices that he has a voice. But both in Proprietary and Mutual Offices, he is fairly entitled to know that the amount contracted to be paid to his survivors at his death actually exists in securities of known value. When the assuring Company gets into difficulties, as the Albert did, it may be too late for the assurer to join another office. He cannot recover the premiums he has been paying in for many years, nor can he get back the youth and health which he possessed when he effected his original assurance. Hence, if he abandons his policy, he loses all that he has paid; and if he succeed in effecting an assurance with another office, it will only be at an increased rate in proportion to his advanced years. Under these circumstances, it seems to us that the assurer is fairly entitled to all the protection, such as it is, which publicity of accounts can give him,—to the same degree of protection, in fact, which Parliament for much less cogent reasons, has already thrown around the holder of railway shares and debentures.

The provisions of 'The Regulations of Railways Act,' indeed, furnish a valuable precedent for the guidance of Parliament in the present case, and sufficiently indicate the sort of information which Assurance Companies should be required to publish with a view to the public protection. Their annual statements ought at least to include a complete statement of“ the capital authorised, created, and received, together with a complete

complete statement of income and expenditure in all its details. In the case of Assurance Companies, this ought to be made imperative. The accounts of income and expenditure, as now published, are in many cases calculated to mislead rather than inform. They give the amount insured, the amount of assurance fund, the amount of premium income; but the important item of working expenses can in comparatively few cases be ascertained. And yet the solvency or otherwise of a Life Assurance Office mainly depends upon the cost at which its new business is obtained and conducted. The Company that forces a business by encroaching on its assurance fund, is in no better condition than the thriftless merchant who forces a trade by the sacrifice of capital as well as profits, the end being as inevitable in the one case as it is in the other.

The

The accounts of Assurance Companies, to be complete and satisfactory, ought to give at least the following particulars as to their financial position: -The amount of assurances in force; the amount of premiums receivable on the same; the total claims paid during the year; the total income received during the year; the amount of expenses incurred and paid during the year, specifying agency, advertising, and charges of management; the amount of the accumulated fund and how invested, stating the particulars of such investments as are not in mortgage of real estate, the interest received from such investments during the year, and the amount of interest remaining in arrear. information published ought also to include a periodical valuation of the liabilities and assets, setting forth the principles on which the valuation is made, viz.: the table of mortality assumed, the rate of interest adopted in the calculations, and whether the 'loading' is or is not deducted in valuing the premiums. Such statement, certified by the Chairman and Actuary of the respective Companies, ought to be deposited with the Board of Trade, and open to the inspection of the shareholders and policy-holders. The more complete the information given under these various heads, the greater will be the public confidence inspired. Indeed, contracts of assurance are so much more important—it might almost be said, of so solemn a character, compared with others— that the element of secresy ought entirely to be eliminated from Life Assurance accounts. It has also been strongly urged in some quarters, that, to make assurance doubly sure, the audit should be entirely independent, and conducted under the superintendence of a public officer altogether unconnected with the Companies.

It ought also to be competent, as in the case of Railway Companies, for a certain number of shareholders or policy-holders—

say

say two-fifths of either-to apply to the Board of Trade to appoint an Inspector of Accounts, on showing reasonable grounds for inquiry, and giving security for payment of the costs thereof; and it ought to be competent for the Board of Trade, on the officer appointed reporting that the office is unable to meet its obligations, to prohibit its proceeding with the further collection of moneys from the public, and order it thereupon to be wound

up.

Nor should the recommendation contained in the Committee's Report of 1853 to be overlooked,-namely, the investment by every assuring office of a precautionary sum in Government securities, by way of guarantee to the assured. This provision has for some time been in force in the principal American States, and has been found of essential value. Before any Assurance Office is permitted to do business in New York and Massachusetts, a sum of 20,000l. is required to be so invested; and it is even proposed in the last Report of the Insurance Superintendent of the State of New York, that this amount should be considerably increased. Besides which, if the Government Insurance Superintendent finds, on examination, that the funds of any Company are not sufficient to meet its liabilities, it must from that time cease to do business in the States. Several English offices, unable to comply with the requirements of the United States authorities, were consequently under the necessity of closing their business there; notwithstanding which, they continued their operations in England, where no such supervision was exercised, until the inevitable break-down was reached, to the great discredit of the system.

It will be sufficient to refer to the case of the International, which was thus banished from the States back to its home in England, where it ultimately fell. The causes of its ruin, which were clear and unmistakeable, are thus referred to by the Hon. W. Barnes, in his last Report on the Life Assurance Offices of the State of New York:

'The International had respectable and wealthy names on its Board and among its officers and founders; it did not lack scientific and actuarial ability of a high order; its average mortality did not reach its average expectation. Its business was large and lucrative. What elements of success were then lacking by which its officers were disgraced, its policy-holders disappointed, and the fame of an English insurance corporation tarnished, and British credit destroyed in the minds of hundreds of innocent sufferers in this country? The society did not maintain a reserve equal to the net value of its policies, and the great lever of compound interest had not a sufficient fulcrum on which to exert its wonderful power; the officers received percentages on the profits; the agents received excessive commissions, and heavy travelling