On 1st January 1993 a life office issued a with-profit assurance endowment policy with a term of 10 years to each of 100 male lives then aged exactly 50. The basic sum assured under each contract was $20,000, and the basic sum assured, plus any bonuses, is payable on maturity or immediately on earlier death. Level annual premiums are payable in advance throughout the term. Among the group of policies there were 2 deaths during 1993 and 4 deaths during 1994, There were no lapses or surrenders during 1993 or 1994. For this group of policies, the office has declared a compound reversionary bonus of 3 3/4% per annum vesting in advance on each 1st January from outset. The office values the policies by a net premium method, using AM92 ultimate mortality and interest at 3% p.a. Calculate the total reserves which the office held for the group of policies on 31st December 1994.

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