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Obligations (from program and financing) 6,703 7,435 8,334

Financial Condition (in thousands of dollars) Increase (-) or decrease in gross unpaid obligations... 151 -54 -85

1961 1962 1963 1964 actual actual

estimate estimate Gross expenditures

6,854 7,381 8,249 Revenues and other receipts (from program

Assets: and financing).

6,166 7,288 8,393
Treasury balance...

974 264 158 287 Increase (-) in accounts receivable, net.

-22 -13 -15
Accounts receivable, net.

31
53 66

81 Policy loans...

1,559 2,118 2,776 3,534 Applicable receipts.

6,144 7,275 8,378
Policy liens...

6
8

10 Budget expenditures..

710 106 -129

Total assets. -

2,568 2,441 3,008 3,912 Liabilities: Current

1,197 1,046 1,100 1,185 This fund finances the payment of claims on nonpar

Operating reserves: ticipating insurance policies issued to veterans with

Reserve for cash surrender
value...

14,157 17,249 20,500 25,000 service-connected disabilities which make them ineligible Reserve for future installments for commercial insurance (38 U.S.C. 722). Administra on matured contracts..

3,644 3,8464,215 4,571 tive expenses are paid from the General operating expenses appropriation.

Total liabilities.

18,998 22,141 25,815 30,756 Budget program-1. Death claims.-Payments to sur Government equity: viving beneficiaries continue to increase as new deaths Non-interest-bearing capital.. 4,500 4,500 4,500 4,500 occur among the increasing number of policyholders.

Deficit (-)-----

-20,930 -24,200 -27,307-31,344 3. Cash surrenders.-A policyholder may terminate his

Total Government equity-----16,430 -19,700 -22,807 -26,844 insurance by cashing in his policy for its cash value.

4. Policy loans.-A policyholder may borrow up to 94% of the cash value of bis policy. This activity increases

Analysis of Government Equity (in thousands of dollars) with the increased number of policyholders. The general increase in the activity of this fund is Unobligated balance (-).

-192 -729 -876 -817 indicated in the following table (dollars in thousands): Operating reserves (-)

-17,801 -21,095-24,715 -29.571

Invested capital and earnings.. 1,563 2,124 2,784 3,544 June 30, June 30, June 30, June 30, 1961 1962 1963 1964

Total Government equity--- -16,430 -19,700 -22,807 -26,844 Number of policies.--

46,594 49,577 52,800 55,800 Insurance in force... $407,738 $432,896 $461,000 $487,000

Object Classification (in thousands of dollars) Financing.-Operations are financed from premiums and other receipts. Additional funds are derived from

1962 1963 1964 the Veterans insurance and indemnities appropriation in

actual estimate estimate stead of direct appropriations to this fund." It is estimated that the payment will be $2 million in 1963 and 33 Investments and loans --

893

1,080 1,275 $2.7 million in 1964.

42 Insurance claims and indemnities.

5,810 6,355 7,059 Operating results and financial condition. Because pre Total obligations...

6.703 7,435 8,334 mium and other receipts continue to be insufficient to

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The fund finances claims arising from the guarantee of premiums due on commercial life insurance policies held by servicemen while they are in service and for 2 years after discharge (72 Stat. 487). The Government guarantees the repayment of any indebtedness not liquidated by the insured himself. Any payment by the Government on cases approved subsequent to October 6, 1942, creates a debt owed the Government by the insured.

Budget program--Insurance program.-Claims paid on guaranteed premiums are made to commercial insurance companies in cases where the servicemen failed to make premium payments guaranteed by the Government.

The activity of the fund is indicated in the following table:

1962 actual 1963 estimate 1964 estimate Number of settlements..

20
70

30 Average cost per settlement..

$1,026 $750 $750 Financing.-Payment of claims against this fund are financed from collection of claims receivable, revenue, and appropriations as needed.

Operating results and financial condition. The payment of refund claims has created expenses substantially in excess of the small revenue of the fund, thereby increasing the deficit to $1.9 million in 1962 with nominal losses continuing through 1964.

Total operating costs, funded.
Capital outlay:

6. Policy loans made.
7. Policy liens established..

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Total capital outlay.----
Total program costs, funded—obliga-

tions...

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Financing:
Revenues and other receipts:

Policy loans repaid.
Policy liens repaid..
Premiums earned.
Interest on investments.

26,107 2,763

210

15 27,977 2,970

350

20 28,370 3,290

89,115 ments.

-40

Public enterprise funds-Continued

subsequently entitled to borrow up to 94% of the cash

value of the new policy. Disbursement of such loans VETERANS SPECIAL TERM INSURANCE FUND-Continued

from this fund increased from $331 thousand in 1961 to Program and Financing (in thousands of dollars)-Continued

$703 thousand in 1962.

The general decrease in the activity of this fund is indi1962 1963

1964 actual

cated in the following table (dollars in thousands): estimate estimate

June 30, June 30, June 30, June 30, Financing-Continued

1961
1962
1963

1964 Revenues and other receipts-Continued

Number of policies.

658,853 649,973

641,000 631,000 Other revenue (optional settlements) --- 1,303_1,351 1,395 Insurance in force. $5,842,933 $5,758,099 $5,673,000 $5,584,000

Total revenues and other receipts... 30,322 32,522 33,425 Financing. Payments from this fund are financed priUnobligated balance brought forward: U.S.

marily from premium receipts and interest on investsecurities (par).

98,849 80,340 Capital transfer: Payment of earnings (-)-- -4,000 -5,000 -9,000 Operating results and financial condition.-Favorable Unobligated balance transferred to "General

mortality experience on insurance written against this operating expenses" (75 Stat. 495) (-).. -221

-40

fund has kept death claims payments well below the Unobligated balance carried forward: U.S. securities (par) (-)---

–80,340 –89,115 – 99,325

amount of premium and interest receipts, thereby pro

ducing an annual increase in the retained earnings of the Financing applied to program.

44,610 18,707 14,175 fund. The retained earnings are being reduced by the

special dividend and any further excess will be paid to the Summary of Sources and Application of Funds (in thousands of dollars)

Treasury.

Revenue, Expense, and Retained Earnings (in thousands of dollars) Obligations (from program and financing). 44,610 18,707 14,175 Increase in gross unpaid obligations (-). -611 -249 -172

1962 1963 1964

actual estimate estimate Gross expenditures--

43,999 18,458 14,003 Revenues and other receipts (from program and

Revenue: financing) ---------

30,322 32,522 33, 425
Funded.

30,173 32,298 33,055 Increase in accounts receivable, net (-).

-118 -2

-14
Nonfunded..

110 120 130 Applicable receipts.

30,204 32,520 33,411
Total revenue

30,283 32,418 33,185 Expense...

94,366 26,738 24,600 Budget expenditures...

13,795 -14,062 -19,408

Net income or loss (-) for the year.-----64,083 5,680 8,585
Analysis of retained earnings:
Retained earnings, start of year.

77,379 9,075 9,715 The fund finances the payment of claims on nonpartici

Payment of earnings (-)-

-4,000 -5,000 -9,000 pating insurance policies issued before January 1, 1957,

Unobligated balance transferred to "General
operating expenses” (-)-----

-221 -40

-40 to veterans who served in the Armed Forces subsequent to April 1951 (38 U.S.C. 723). Policyholders were given Retained earnings, end of year.

9,075 9,715

9,260 the right (72 Stat. 1716) to convert to a permanent plan or to a new form of term insurance which may not be renewed beyond age 50 but which costs less than un

Financial Condition (in thousands of dollars) limited term insurance. Those who converted to &

1963 1964 permanent plan also acquired the right to purchase total

actual actual estimate estimate disability income coverage with an additional premium.

The fund has accumulated retained earnings in excess of Assets: its anticipated liabilities. Provision was made (75 Stat. Treasury balance.

186 494

672

540 495) for a onetime distribution of these retained earnings

U.S. securities (par)

106,280 87,956 96,800 107,300 Accounts receivable, net..

7

127 141 by payment of a special dividend to policyholders whose

Policy loans.

344 909 1,600 2,300 insurance was in force during November or December 1960 Policy liens..

6
9
15

15 or January 1961 if they have a permanent or limited term

Total assets. plan or convert from unlimited term to permanent or

106,823 89, 493 99,214 110,296 fimited term before September 14, 1963. The dividend Liabilities: will also be paid on unlimited term policies which mature Current

7,624 8,235 8, 484 8,656 by death on or after the November 1960 premium due date

Operating reserves:
Policy reserves..

12,098 41,808 and before September 1963.

59,700 79.180

Premium waiver disability reBudget program--1. Death claims.-Payments to sur

3,933 4,326 4,600 5,000 viving beneficiaries continue to increase as new deaths Reserve for future installoccur among policyholders.

ments on matured contracts. 4,761 4,799 4,900 5,200 2. Disability claims.-Payments to individuals who have

Reserve for total disability.. 1,028 1,535 2,100 3,000

Reserve for unpaid special purchased total disability coverage and who subsequently dividend....

19,715 9,715 become totally disabled began in 1960. 4. Dividends.-Payments began in 1962 and will be

Total liabilities..

29,444 80,418 89,499 101,036 completed in 1964.

Government equity: 6. Policy loans made.-The policyholders who con Retained earnings.

77,379 9,075 9,715 9,260 verted their insurance from term to permanent plan were

1961

1962

125

serves..

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This fund is used to make loans up to $100 to disabled veterans eligible for vocational rehabilitation who are without sufficient funds to meet their expenses (38 U.S.C. 1507). Repayments are used to make new loans.

Administrative expenses are borne by the General operating expenses appropriation. WORKLOAD, AMOUNTS LOANED AND REPAID

1962 actual 1963 estimate 1964 estimate Number of loans made..

2,262 2,000 1,750 Average per loan..-

$100 $100 $100 Number of loans outstanding-

1,515 1,515 1,515 Average amount per loan outstanding. $50

$50

$50 Total amount of loans made in thousands).

$226

$200 $175 Repayment of loans (in thousands)

$240
$200

$175

Program by activities:
Operating costs, funded:
1. Procurement, distribution, and services

program:
Cost of goods sold..

Other expense.-
2. Publications and reproduction program:

Cost of goods sold.
Other expense..---

Total operating costs, funded..
Change in selected resources 1

Total operating obligations.... Capital outlay: 1. Procurement,"distribution, and services

program: Purchase of equipment....

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