31 OCTOBER 1931, Page 31

Life Assurance Bonus Prospects

THE postponement by the Atlas Assurance Company of the declaration of a bonus on its participating policies has disturbed holders of with-profit policies in general. Underpresent financialand political conditions it is as diffi- cult to see ahead in life assurance as in other matters, but a brief review of the-points involved may be welcome. - In the first place, it should be noted that the Atlas announcement states that life business has, apart from the. decline in the market value of securities, run exceed- ingly well ; all the ordinary sources of revenue have been well maintained and are sufficient to cover a bonus in excess of the current interim rate of 48s. per £100 per annum. This clearly shows that the chief adverse factor is depreciation of securities. Depreciation will vary with each life office according to the nature of its investments and the policy pursued in the past. Both fixed and variable interest securities have suffered depreciation, but the former to a much lesser extent. English and Scottish life offices hold only small amounts of ordinary shares and depreciation in their case should therefore be confined within moderate limits. Ruling quotations of high-class stocks are not so low as they have been in the past and those offices which then wrote down the book value of their invest- ments and have not since written it up again should escape depreciation except in respect of Stock Exchange securities acquired in recent years. Investment reserves have been created in other cases and should go a long way to meet any probable depreciation.