SEVENTY-FIVE YEARS.

Auckland Star, Volume LXV, Issue 184, 6 August 1934, Page 4

SEVENTY-FIVE YEARS.

NEW ZEALAND INSURANCE. SOUND AND PROGRESSIVE. RESULTS IN PAST DECADE. Though an infant by comparison with some of the old-established English companies, the Xew Zealand Insurance Company, when considered in connection with a much younger country, can claim by reason of its 75 years, to have already attained a lusty maturity. This, apparently, has been the view taken by the directors. The completion of this period, marking as it docs a fresh milestone in a very notable industrial career, will be suitably stressed at to-morrow's annual meeting, , when shareholders are to receive tangible recognition of the event in the shape of a handsome bonus. The company's record and its present poMition may properly be considered a source of pride, not only to its shareholders, its directorate and staff, but also to the Dominion as a whole. Taking the purely financial view one need only refer to the recent slump. The gieat strength of the chief insurance companies operating in this Dominion enabled them not only to meet all their own commitments and maintain much-needed distributions to shareholders, but also to materially assist the Government in its plans for safeguarding the public finance. When the people of this Dominion had to face the greatest economic upheaval known to the present generation, the impregnable front presented by the banks and the insurance companies was a sheet anchor that never failed or looked like failing. Past Years Compared. Reverting particularly to the New Zealand Insurance Company, it is interesting to trace its results over the past decade as shown in the following table: —

In comparing the position of reserves in various years, it should be noted that in 1925 £150,000 was capitalised, in 1927 £150,000, and in 1930 £300,000. The more thoroughly it "s examined the more impressive does this record appear. The litet three years have been harassing to all forms of industry, and insurance companies can no more evade the effects of an economic depression than the averago citizen can elude the Bales tax. With property and goods that have been insured losing up to 50 per cent in value; their problem has been of the doubioedged variety. To tell a customer chat his £1000 property can only be insured for £500 is to voluntarily halve the company's income therefrom. At the same time there is an even chance that the customer resenting what he looks upon as undue depreciation of his property, may seek to transfer his insurance to another company in the hope of securing greater cover. This is sufficient to indicate that success in the conduct of insurance business in recent years has necessitated unceasing vigilance on the part of the staff in seeking to retain customers' good will and yet handle the business with the conservatism that past experience has shown to be necessary. When these factors are considered, it seems remarkable that the premium receipts have kept up to their present level. Sources of Income. The following table, giving the respective .proportions of the profit shown. by the underwriting and investment sections, is of interest in this connection: — Underwriting Investment profits. earnings. & £ 1925 ......... 103,277 111.597 80,158 117,240 1927 90,153 125,358 I'J2B 80,521 130,271 1929 80,210 134,077 1030 91,38(5 140,114 1931 76,573 140,206 1932 77,800 126,455 1033 ' 74,f>04 1-J0.044 1934 110,593 117,702 The increase in the underwriting surplus over the latest term is somewhat startling. It is chiefly attributable to a sharp drop in the lofts rate. This seems to have come as a direct consequence of the depression. The fact that policy holders have had to accept lower valuations as the basis of compensation naturally affects the total paid out, and a further factor is that this falling price trend emphasises the disadvantages of a fire from the realisation aspect, and insurers are apt to display greater vigilance in avoiding a conflagration. The reduction in investment earnings is merely the inevitable reflex of lowered interest rates and will probably be still more apparent in next year's accounts. Expenses and Losses. Further interesting details of the business are shown in the following table:— KxBx- Loss pense Premiums. Losses, penses. Rate. Rate.

£ a £ p.c. p.c. 1925 1,072,761 603,650 342,334 56.2 31.9 1926 1,066,012 633,973 355,380 59.48 33.33 1027 1,121,425 664,684 338,588 59.02-30.19 1028 1,150,232 694,344 361,367 60.36 31.41 1020 1,183,074 724,100 362,573 61.17 30.62 1930 1,199,382 737,719 362,277 61.51 30.21 1931 1,145,257 740,245 353,439 64.63 30.86 1032 1,050,351 670,714 340,331 63.86 33.26 1933 1,008,530 622,039 333,387 61.68 33.07 1934 1,001,328 553,886 336,848 55.32 33.64 Premiums again show, a slight reduction, but in view of reduced values of property and commodities already referred to, the decline loses any special significance.

Balance-sheet Items. Following are balance-sheet items over the past three years:— LIABILITIES. 1932. 1033. 1934. £ £ £ Capital 1,500,000 1,J500,000 1,500.000 Reserve fund 350,000 400,000 500,000 Reserve for unexpl red risks 527,500 506,000 506,000 Contlng. Res. — — 145,009 Invest, fluctuation and con. A/c . 149,251 151,079 52,065 Taxation provision ... 20,000 20,000 20,000 Approp. for un a n c e rtai n g d losses .... 190,247 205,431 100,953 S u .n d r y creditors . 111,477 110,770 90,336 ASSETS. 1932. 1933. 1934. £ £ £ Mortgages .. 52,000 52,000 52.250 Shareil 152,943 180,589 174,441 Properties .. 417,680 418,749 417,009 Bond:) and debentures 1.964,237 1,973,893 2,104,593 Fixed dep'sts 110,458 158,152 154,002 Accrued interest and rents .... 38,710 38,534 38,283 Branch bal'cs 175,054 133,294 109,900 Cash 115,988 117,922 123,004 Total assets 3,033,680 3,073,133 3,224,101 The latest figures contain several items indicating that the company has finished ite seventy-fifth year stronger than ever financially. Reserves, including the carryforward, totalled at balancing time £1,320,311, and total assets reached record proportions at £3,224,101. A new item appears in the shape of a contingency reserve account, at just under £146,000. General reserve has received £100,000 taken from the investment fluctuation account.

On the assets side the item bonds and debentures again commands most attention, comprising almost two-thirds of the total assets. The following additional particulars of this item may be noted:— Bonds and Debentures. (Government and Municipal Securities.) 1932. 1933. 1034. £ £ £ U.K., N.Z. & Aus 1,591,400 1,503,005 1,704,091 Union of S.A. 57,601 57,001 57,(501 U.S.A 102,724 104,183 190,293 S. America . 80,570 80,55!) 8(5.1(54 Japan 22,794 22,794 42,111 Debentures (not Govt. or municipal) .;.. 19,052 10,752 23,833 Totals ... £1,864,237 £1,973,803 £2,104,503 There is, of course, nothing to indicate whether the increase in United Kingdom, New Zealand and Australian securities is due to fresh purchases or to an appreciation of values. However, the auditors' report states explicitly that the aggregate market value of "the securities" as at May 31 is in excess of the amount appearing in the balance-sheet. The Trustee Branch. In 1914 the company inaugurated a trustee branch, which, in its early stages, was a charge on general profits. It has, however, made steady progress, and by now doubtless makes a satisfactory contribution to the profit and loss account. The following table shows the amounts held in trust in the years named: —■ £ £ 1025 ... 3,988,614 1030 ... 5,787.223 1020 ... 4,338,170 1931 ... 3,078,870 1027 ... 4,041,510 1032 ... 5,890,161 1928 ... 8,371,257 1033 ... 0,157.848 1920 ... 5,3:53,740 103 i ... 5,555,107 The decrease in the latest figures is due to the fact that debenture trusts arc down by £9(59,000. World-wide Operations. In maintaining its annual premium at over the million mark, the company has to battle for business not only in this Dominion but also in Great Britain, Aus-' tralia, the United States of America, South America, South Africa, India and the Far East. From a national aspect it is indeed a source of gratification that a purely New Zealand institution should have shown sufficient enterprise and capacity to successfully meet competition in the keenest of the world's markets. It is an essential in insurance business that all tho eggs should.not be carried in one basket, and this wide stretch of the company's operations strengthens its position in the acceptance of insurance risks. The Investment Aspect. The following table shows the market values of the shares at this period in recent years:— ' ( Tii kl to £ s (1 1024 12 0 1 10 0 1025 12 0 115 0 ]02(i 14 0 2 0 6 1027 11 0 1 19 6 J!)2S II! 0 2 2 0 11)20 Hi <» 2 S '0 10.10 H> 0 2 5 0 1031 2<> 0 2 1 3 11)32 20 0 2 0 6 ]«>:{:•, 20 o 2 12 6 1034 20 0 3 2 6 Based on latest valuations and dividends, the present pur-chaser receives just over 3V4 .per cent per annum on his outlay. This does not take into account the proposed bonus.

Earnings. Dividends. Iieservee. £ p.c. £ £ 1925 ... 214,874 Ki.2 118,750 1,205,050 102(5 ... 11»7.:«)S 11.0 ±25,000 l,i:)0,2tf7 1027 ... 1215,511 12J 131,250 1,232,180 1028 ... 21O.T04 Hi l:!7,50O 1,1!)1,225 1020 ... 214,287 llj 137,500 1,285,814 m:!0 ... 2;il,4!l!l 12 14:'.,75O 1,401,351 1031 ... •Jlti.SOO 10 15I),(KX) 1,15(I,!I4.{ 1O:W ... 204.2U1 10 150,01)0 1,136,0511 103:i ... u>4.048 10 150,000 I.IOI.IKU 1034 ... 228,21)5 *121 «1S7,5OO 1,320,311 *liieluiles bouus.