REVERSION. When the enjoyment of money, or of any kind of property is post- poned until, or contingent on, the happening of a given event or given_events, the pres -cut right to the deferred benefit is called a reversion. When the emergence of the right is certain, and the date fixed, to ascertain the immediate or marketable value of a rever sion, is a very simple calculation; for example, let it be required to knew for what sum a man should sell the right to receive £100 payable ten years hence. Suppose that be expects to be able to improve the money for which be sells his right at five per cent. per annum, compound interest, then one obvious way to get an answer to the question is simply to calculate what suns annually accumulated at the assumed rate will in ten years .amount to £100. The answer (see art. INTEREST) will be found to be £61, 7s. 10d. When the date of the emergence of the reversionary right is uncertain, the purchase, in an individual case, must always be a speculation; but if there are a suffic"-nt number of such rights, postponed to events of which there are sufficient observations from which to deduce laws of average, then the marketable value is easily calculated: for example, it is required to know what is the immediate value of £100 payable certainly on the death of a man aged 60. Here the perpetuity divides itself into the present value of au annuity of the annual interest of the £100 on the life of a male aged 60, and the reversionary right which is to emerge when the life fails. Having then ascertained the former value, and
deducted it from £100, the remainder will be the present value of the reversion. When an assurance company buys a reversion, it is simply buying that which it sells when it grants a policy of life assurance. In the former case, however, an office, to secure its expenses and profits, will assume a high rate of interest and a long life; in the latter case, for the same reason, it will assume a low rate and a short life. Where the rever sion is contingent, problems arise whose solution requires the utmost skill on the part of the actuary; for instance, B, aged 30, wishes to borrow £100 on the security of a sum payable to him in the event of his surviving A, aged 58. Here the security being doubt ful, it could only be rendered marketable by assuring a sum to be paid in the event of B Eying before A; and there would remain the important question of what this suns should be, so as to cover the loan and the premiums of assurance with yearly accumulations on both. This question will be found ably discussed in a paper by Mr, Lang in the Assur ance Magazine for 1830, p. 18.—On the general subject, see the seine work for 1851, paper by C. Jellicoe, Esq.; do. for 1855, p. 230, paper by Robert Tucker, Esq.