At the Society’s Special Meeting held in Wellington on 16 March 2013 it was agreed that the Society would cease all insurance business, for the reasons set out in previous newsletters. The meeting, after discussion and with some amendment, accepted the Board’s recommended Rule changes to achieve this.
What does that mean? All insurance cover provided by the Society ceased at midnight on 31 March 2013. The value of each policy-holder’s life assurance or funeral benefit as at 31 March 2013 is currently being calculated by an actuary. This ‘actuarial value’ will then be held by the Society for that policy holder, as a fixed sum owed by the Society to the policy holder.
The Society will be contacting each member affected by this change to advise them of their entitlement. We anticipate that this will be during June 2013.
The Society will be paying out the money owing to former policy holders progressively, as funds come to hand. It is not certain how quickly this can happen, but I am confident that the great majority of funds will be available to members who require it within months.
On the other hand, I believe that not every former policy holder will need their money to be paid out immediately. I, for one, will be leaving my modest amount with the Society (more on this below).
There are two main reasons why the Society is not in a position to pay out every former policy holder immediately. Firstly, the Society has invested prudently over the years, which means that some of the Society’s investments are in medium-term assets such as mortgages. Secondly, the Society is pursuing a legal action against its former auditors to recover some of the money stolen from it. The amount and timing of that recovery are uncertain, although the Board is confident of a positive outcome.
As well as the actuarial value mentioned above (as a debt to each former policy holder), the Board is as confident as is possible in a dynamic investment environment, that bonuses will be available to members, based on the good investment returns that the Society has been achieving and on other gains such as the legal action mentioned above. These bonuses will be paid out from time-to-time in proportion to the amount owing to members at that time.
It is a legal requirement, and it is included in the Rules, that only members can receive such bonuses. Former policy holders who chose not to continue their membership of the Society will of course be paid out the money owing to them as determined by the actuary, in the same way as other former policy holders. However they will not participate in any gains (or losses!) that the Society is able to achieve through its investments and operations. So I intend to maintain my membership!
Members who did not have insurance policies are not affected by these changes, and we hope that they will continue to maintain their membership of the Society.
So much for the past. What of the future? The Board has already reaffirmed its belief in, and commitment to, the future of the Society as a fraternal and benevolent organisation. While the nature and structure of the Society will be very different from the past, its future lies in local branches that meet local needs and work together to provide coordinated national benefits.
To help facilitate this discussion, the Board is setting aside a good part of our Annual Meeting on 20 July 2013 to explore this future together, and all members are encouraged to attend.
We will continue to provide more detailed information over the coming months on the Society’s website.
Gordon Stewart
President
