COMPANY MEETING

UNITED KINGDOM LIFE OFFICE

THE LAST WAR AND THIS—STRONGER POSITION TODAY

SIR ERNEST BENN ON SPENDING AND SAVING THE CENTENARY OF THE INSTITUTION

THE ninety-ninth annual general meeting of the members of the United Kingdom Temperance and General Provident Institution was held on Wednesday, March 20th, 1940, in the Incorporated Accountants' Hall, Victoria Embankment, W.C.

The Chairman (Sir Ernest J. P. Benn, Bt.) said :— My Lords, Ladies and Gentlemen, Once again I have the honour to submit fox your approval the Report and Accounts of this great Institution, this being the ninety-ninth occasion on which similar Accounts have been presented. DIRECTORS The acceptance by the Marquess of Lothian of the post of Ambassador to the United States involved, to our very great regret, his resignation, and we were very happy when Lord Glamis accepted our unanimous invitation to become one of us. Lord Glamis brings us a wealth of commercial ,experience, chiefly from the coalfield, but it also happens that he is the first professional soldier to be a Director of the Institution.

With the outbreak of war, Mr. Eustace Illingworth, who has rendered such valuable service for many years, determined that he would make way for someone who could give more time to our affairs. The seat has been filled by the election of Mr. John Armstrong Drexel, whose name stands high in the banking world. As Chairman of the British Overseas Bank, and in other similar ways, Mr. Drexel is actively engaged in keeping open, so far as i that is possible, those financial channels through which alone the trade of the world can flow. I know of no more vital public service, and, incidentally, a service upon which the prosperity of this Institution largely depends. In moving the adoption of your Accounts a year ago, I described my task as " perhaps more difficult than ever before in my experience." That was in a time of peace, and I suppose I ought to approach my duty today, in the midst of all the risks of war, with still greater diffidence. But strangely enough, that is not how I feel about it. A year ago we faced the unknown ; today we have trials and difficulties in plenty, but in a curious sort of way we do seem to know better where we are. We are up against grim reality, instead of mythical possibilities WAR The War, as war, is going far better than was thought to be possible up to last August. We are not troubled, as we sometimes were in 1914-18, with a single doubt as to the ultimate issue of the conflict. This really wonderful position has been reached by the thorough-going nature of our national preparations, and the determination of every individual to maintain our strength intact.

For this purpose it has been thought wise to plan and control every detail of our lives. We have willingly surrendered hard-won liberties. The middle classes, who bear most of the strain and get least of the credit, shopkeepers and professional men and women, have faced loss without a murmur, so long as they felt they were thus serving the national interest. Merchants, brokers, agents, jobbers, commercial travellers have been put out of business by controls and pools. Markets have been abolished, and the consequential damage to our economic foundations is beyond computation. Still there is no word of protest if all this is helping to win the War. Doubts and discontents do, however, creep in, when it is found that some of the control is planned and exercised by avowed enemies of private enterprise. It is open to doubt whether all of these costly schemes would have seen the light if war winning had been the only motive in the minds of their devisors.

As we planned for war, we must also plan for peace, remembering that peace and war are opposites. Most of the things we have done for war will need undoing for peace, and we must be sure that when the War is over, the freedom for which we have fought is duly restored to us, and in full measure. Our Institution was and is founded upsn freedom, the rights of property, the sanctity of contract, and above all, on a full measure of confidence and faith in the individual.

It is of the first importance that we should be quite clear that control and management, with all their costly blunders, while necessary for war, are devices for use by dictators who rely not upon confidence, but upon force, and that ihese things have no lot or part in any true conception of the peaceful democratic State.

The levity with which control schemes are made, altered, with- drawn and revived only strengthens the conclusion that public affairs have a long way to go before they reach the standards of responsibility common to the City of London.

THE FUND It would be idle, in these circumstances, to pretend that your vast estate is unaffected by the events of the last six months. On the other hand, it would be wrong to overestimate the extent of the damage. A very different position arose in September, 1939, from that or 1914. The anxieties and uncertainties of recent years had prompteo us to set aside a million, outside the total of our fund, to mee• unforeseen contingencies—a quite unusual precaution in assuranc' accountancy. If we entertained any hopes, as in 1914, of a short and sharp struggle, we left those hopes out of our calculations, and accepted to the letter the Government's view of a three years' war. Whereas twenty-five years ago the full effects crept gradualh upon us, this time we discounted them all, right at the start, wit] the result that we feel that if there is any safety anywhere in time of modern war, we have rather more of it today than we ha( at the corresponding meeting twenty-five years ago.

So far as we can see, our investments are well chosen to stark. the strain of the future, but insofar as profits and bonuses an governed by taxation, they must suffer their share of the genera. impoverishment.

At current Stock Exchange prices, we have sufficient to rim, all our liabilities, for sums assured and bonuses, calculated on the most stringent basis • in addition, our Reserve Fund of a million is untouched, and above all that there is still a, small hidden reserve.

SPENDING AND SAVING Many people are puzzled by the problems of spending and saving, the small saver in particular finding the arguments difficult to apply to his own circumstances. This and similar Institutions are able to provide the perfect solution. The truth can be stated in very simple terms. " First of all refrain so far as you can from the purchase of anything which involves an import from abroad, or which absorbs labour wanted by the Government for the purposes of the War Then carry on with your normal purchases of other things to keep the trade of the country going, exercising a little more than your usual economy. If your income remains stationary, or improves, you will in this War find yourself with a surplus, which if applied to Life Assurance will enable us to give additional support to War Loans and provide you with the best of all possible investments."

The Chief Economic Adviser to the Government, Lord Stamp, in a recent speech to a Building Society, showed clearly that money spent on the purchase of an existing house found its way into the Government coffers. The argument applies not only to Building Societies but with added force to Life Assurance Offices.

NEW BUSINESS By the end of August we had secured a substantial rise in the volume of new business written, and I was looking forward to reporting to you yet another record year. But the outbreak of war dispelled those hopes. For a few weeks the general uncertainty caused people to defer consideration of wise plans for the distant future. That phase is passing. The Institution itself, following the precedent of 5954, declined for the first few weeks to consider covering War Risks. That phase has also passed, and we are now offering attractive terms to cover every risk to life.

RATE OF INTEREST Taxation at the drastic rates thought to be necessary by the Chancellor has not yet had its full effect upon our net rate of interest, and we must, I fear, expect the 1940 figures to show larger declines than I now have to report to you. Our gross rate has fallen slightly by reason of defaults due to the War, and we have probably already experienced the worst in this category. For the year, your Fund has thus earned £4 19s. 5d. per cent. gross against £5 2s. 4d. per cent., a diminution of 2s. rid. per cent. The nett rate falls from £4 is. 6d. per cent. to £3 14s. 2d. per cent., a diminution of 7s. 4d. per cent., the tax-gatherer taking the difference.

EXPENSE RATIO Your directors are very pleased to report a slight drop in the expense ratio at a time when an increase might well have been excused. Notwithstanding the heavy calls for A.R.P., and the expense of the reorganisation and removal of the Accounts Depart- ment, the ratio has fallen from 14.7 per cent. to 14.6 per cent.

MORTALITY AND CLAIMS Claims by death are well below expectation. Our experience in 1939 was not as happy as in the previous year, but we still had in numbers only 78.6 per cent. of the claims expected under the new and more stringent tables adopted five years ago.

Claims arising from the maturity of Endowment Assurances are automatic, and full provision has, of course, been made for them. WAR LOANS AND INSURANCE " OFFERS " Twenty-five years ago, one of my predecessors, the late Sir Thomas Whittaker, addressed you on the duties of a Life Office towards War Loans. We were then, as now, doing all that was possible to support the Government in the prosecution of the Great War. We were faced then, as now, with competitors who felt it appropriate to use War Loans as a means to new business and were criticised for what some thought to be lack of enterprise and even lack of patriotism. Our views have not changed in this matter. We invite insurers to accept the protection of the £26,000,000 of our general fund and to share in the profits or losses arising from our investments. That we believe to be the proper basis of Mutual Life Assurance and we are not prepared to earmark any particular investment to any particular policy.

We applied for our share of the recent War Loan and our allot- ment with all its prospects belongs in equal measure to the whole body of our members. Any increase in our membership will strengthen our position and enable us to give appropriate support, as we did in 1914-18, to each of the War Loans as they come along.

OUR CENTENARY • With this year the Institution achieves its Centenary, and next March, if you will still put up with me, I hope to be addressing you in far happier circumstances. We are considering how we may most appropriately celebrate a full hundred years of public service.

The Report and Accounts were unanimously adopted.