Page 9 Advertisements Column 5

Press, Volume LVIII, Issue 17629, 5 December 1922, Page 9

INSURANCE

TO THJE EDITOR Of " TK» rjUSSI."

Sir, —An advertisement in a recent issue of your papor contains an unauthorised reference to this company. Lest anyone should by such reference be misled into thinking that tho buoinoss of insurance is a gold mine from which great profits may be obtained by thoso who got in early, I wish to draw attention to tho following remarks extracted from the chairman's speech at this company's annual meeting lust month:— During the first 18 years of tho company's existenco tho underwriting result was a loss of £61,659. In 1890 it was decided to write off capital to the extent of £64,628. This was subsequently restored; but tho underwriting surplus over the first 38 years, was not more than 4.75 per cent. Tho balance at credit of underwriting account for tho halfcentury was 7.95 per cent. Tho explanation of capitalisation from reserve funds is therefore not largo underwriting profits. Tho explanation is tho pursuit of a deflnito policy not to distributo any portion o? underwriting surplus, but to accumulate samo for tho greater protection of policy-holders. It is solely owing to tho directors having regarded their position as in tho nature of a trusteeship of funds to bo available for meeting any loss that may occur that the moderate annual surpluses have furnished tho great security the company now affords. If the underwriting surplus had annually been distributed by way of dividend it would have attracted no attention. Neither would tho company bo in any better position to-day t» fulfil its mission than it was 50 yea/.-, ago. Indeed, it would probably hi-ve long since gone into liquidation owing to insufficient resources to meet exceptional losses which periodically occur. Tho great Melbourne fire may be quoted as an illustration. That loss amounted nearly to the wholo of tho paid-up capital of all the Australian and New Zealand insurance companies then doing business in Melbourne. It may be added that to pay commis' sions fcr placing shares of insurance companies and to issue paid-up shares to promoters are novelties wholly foreign to tho principles referred to above. In the accounts of no successful insurance company that I am awaro of has capital credited as paid up not been represented by cash or its equivalent, nor have '' commissions paid in respect of shares" masqueraded as an asset. —I am, etc., P.. 11. UPTON, General Manger, South British Insurance Co., Ltd. ay/a