The Measure of Expenses in Life Assurance

SIR,—Mr. Macfadyen, in his paper on the above subject, read before the Institute in May last, made special reference to a paper contributed by me to the Journal for October 1874, and did me the honour of coupling my name with that of Mr. Sprague, as an originator of a new way of looking at the expenses of life offices. Mr. Macfadyen takes the view that Mr. Sprague and I contend " that " a certain amount of the total outlay should first be set against the " new premiums, and that the order of the companies in economy of " management should be settled by the ratio of the remaining expen" diture to the renewal premium revenue." Mr. Sprague has already stated, in a letter to the Insurance Record, that the above quotation does not correctly represent his views; and for myself, I have to say, that I could only adopt this method of ranking the companies if I believed the initial expenditure in all companies to be uniformly the same ; but I am satisfied this is very far from being the case. What I really contend for is, that the initial and renewal expenses should be stated separately, and that they should be set against the new and renewal premiums respectively. A tabular statement made up in this way, containing in two columns the percentages of new and renewal premiums expended in acquiring and managing the business, would at least be greatly preferable to one made up in the ordinary way. Whether the final result of the two columns could be satisfactorily given in one column, as indicated by Mr. Macfadyen, would depend upon circumstances. My own feeling is that, instead of starting with the assumption of a fixed charge on the first premiums, it might be found more convenient to assume a fixed charge for renewal expenses, (as there is probably less variation in the renewal expenditure of offices than in the initial expenditure,) and rate the offices according to the amount