The principles of investments proper to Life Offices were laid down many years ago by Mr. S. Brown and Mr. A. H. Bailey, and Mr. A. G. Mackenzie summarized them conveniently at the beginning of his paper “On the Practice and Powers of Assurance” Companies in regard to the Investment of their Life Assurance “Funds” in 1891 (J.I.A., xxix, 185). These principles may be said to be the laws which govern our practice; but as in all such matters, it is the application of the law which is of importance, it may serve a useful purpose to-night to review, in the first place, recent changes in the investments of the Offices and ascertain their tendency; secondly,to consider the nature and causes of the fluctuations in values which have recently been strikingly prominent, and finally to make some rough forecast of the future.

It is at once apparent, from the nature of securities easily convertible at short notice, that though suitable for bankers, they are not specially adapted for insurance companies, whilst another great class of investors, namely, trustees and executors, are usually limited to particularly well-secured investments, either by law, or by special provisions incorporated in the settlements or the wills under which they act. The resulting competition in these classes of gilt-edged securities is keen, large sums constantly coming on the market for investment, so that the rates of interest yielded are comparatively low, a fact which tends to drive investors not so limited in power further afield. It is not surprising, therefore, to find that many insurance companies have of late years enlarged their power of investment, as it is now recognized that to give ample discretionary power is the wisest policy.