National Insurance reports RECORD year

Press, Volume XCIX, Issue 29391, 19 December 1960, Page 23

National Insurance reports RECORD year

Addressing a good attendance of members at the eighty-seventh Annual General Meeting of the National Insurance Company of New Zealand, Limited, held on December 14, the Chairman of Directors, Mr J. M. Ritchie, said:—

Today we are holding the Eighty-seventh Annual General Meeting of our Company and, on behalf of the Board, I do welcome you all today and, at the same time, express the Directors’ appreciation of the action of those shareholders who have shown a keen interest in the Company's activities by sending in their proxies.

The death in Perth, Western Australia, on May 31 last, of Mr Edmund J. Smith, came as a great shock to his colleagues on the Board. Mr Smith had been a Director of the Company for 21 years, and I know that he really loved his work on this Board, and in every sense of the word was a true "National” enthusiast. Mr Smith's grandfather, Mr Edmund Smith, was one of the early Directors of this Company, and served on the Board from 1886 to 1894. Will you please stand in silence for a moment.

Mr J. P. Cook, a member of the Dunedin Legal Firm of Messrs Cook, Allan and Cook, was appointed by the Board to fill the vacancy which arose through the death of Mr Smith. Mr Cook’s experience is such that he will undoubetdly prove his value as one of your representatives on the Board. It gives us great pleasure, Mr Cook, to have you with us here today. In May last, whilst en route to the United Kingdom, I experienced the greatest pleasure in officially opening the Company’s new building in Queen street, Melbourne, and in this I was supported by two other Directors, Messrs E. J. Smith and E. O. Hunter. The Company’s General Manager, Mr J. W. Delbridge, was aiso in attendance, together with all the Australian Branch Managers and Assistant Managers. This function was a great success and it was indeed an interesting and valuable experience for three of your Directors to meet so many clients and other friends of the Company. Mr J. O. Wilks, a Melbourne Director, who has done so much to further the interests of our Company, kindly and ably assisted at the Official Opening Ceremony.

The building, although not a large one by Melbourne standards is in many respects quite unique. The exterior is illustrated in the Annual Report now in your hands, and the magnificent modern interior has to be seen in order to realise how impressive it has been made with modem architectural

skill and thought. I can only say that this is a building of which we can be particularly proud, and I feel I should record your thanks to the Company’s Victoria Manager, Mr D. S. Cameron, and to otter members of the staff who assisted him, for the care and attention devoted to the very many requirements in respect of this building and its appointments. Those present at this meeting today, and other shareholders resident here, will have noticed the progress made to date in the erection of the Company's new Head Office Building here in Dunedin. It is the hope of your Directors that the next Annual General Meeting will be held in the Board Room of the new building. It may interest you to know that firm bookings have already been made for the bulk of the space not required by the Company. There remain available only two office or professional suites, plus a ground-floor shop, together with complementary basement if desired.

The Company’s General Manager, Mr J. W. Delbridge, took the opportunity whilst in Melbourne to hold a conference of Australian Managers and Assistant Managers. From observations made by your Directors on the spot, the gathering was a complete success and, from all points of view, nothing but good has resulted from it. It is hoped that a similar conference of all New Zealand Managers will be held towards the end of next year, at the time of the opening of the new building here. On leaving Australia, after visiting Branches there, Mr Delbridge went on to London, and whilst there completed further contracts of insurance and -e--insurance, mostly of a reciprocal nature. During a previous visit to London, the General Manager made arrangements under which our Company was enabled to make acceptances of marine business under its own name, and it was pleasing to receive his latest report to the effect that the steadily rising volume of business selected by Mr L. K. Sweet, an underwriter of wide repute on the London market, has produced very satisfactory results. Other avenues of business in London have been explored from time to time, and the Company’s Manager and other staff there are alive to the possibilities. Mr Delbridge visited other countries in which the Company transacts business, and still others which may present opportunities for future expansion.

The Company’s Tasmanian business has steadily developed

for some time past, and at the end of the year the stage had been reached at which control independent of Victoria Branch was justified; accordingly, as from October last. Tasmania became a direct-reporting Branch, with Mr W. J. Teychenne as its Manager. I now turn to the results for the year:— RESULTS FOR THE YEAR

It is pleasing to report a record year for not only premium income but also Underwriting Profit and Investment Income. The Underwriting Profit, at £123,630, is the highest recorded in the Company’s history, and when is added to it the peak figure of £67,130 representing Investment Income, the total surplus from the operations for the year is the impressive figure of £190,760 not of tax. The Underwriting Profit this year, however, was enhanced not by a diminution in the loss ratio —losses were, in fact, uncomfortably heavy—but by a substantial reduction in charges, particularly taxation. Heavy claims in New Zealand will be responsible for a tax assessment very much lower than one based on a normal year’s trading in New Zealand; on the other hand, the considerable profits won overseas will, in every case, attract tax at rates lower than those applicable in this country. UNDERWRITING ACCOUNT PREMIUM INCOME: Once again each department has supplied a share of £208,496, which figure was the premium increase for the year. With the total at £1,948,334, we shall strive to top the £2.000,000 during the current year, but as the pruning knife will be further applied to some unsatisfactory sources of motor vehicle business, the increase required in order to achieve our objective will be much greater than the difference between the two figures which I have quoted. Motor Vehicle . (Third Party) premium rates are quite inadequate to meet claims—let alone claims plus expenses. In New Zealand, the rates for this class of business are periodically revised in the light of past experience, but legislative bodies elsewhere, particularly in Australia, have despite repeated representations, given little evidence of a desire to remedy matters.

LOSSES: The sum of £1,261,307 represents the paid and outstanding losses for the year, and we must go back for a number of years to find a ratio to premiums of 64.73 per cent. Our fire experi-

ence was not as favourable as that for the preceding year, one contributing factor being the adverse effects of heavy losses, both in number and quantum, in the United Kingdom. My previous references to questionable Motor Vehicle business and to inadequate rates for Motor Vehicle Third Party insurance are, I think, sufficient indications that losses from those sources played too large a part in the total disbursement.

EXPENSES: My earlier remarks concerning the reduced provision for taxation for the year supplies the major reason for the drop in the expense ratio—23.ol per cent, as against 28.81 per cent, for the preceding year. Real economies have, however, been effected, notably by fuller use of the electronic machines purchased about two years ago and by unremitting attention to improvement in the conduct of routine generally. The total of charges, including provision for taxation, is £448,397 as against £501,370 for 1959.

PROVISION FOR UNEARNED PREMIUMS: Once again no alteration has been made in the percentage of premiums set aside as unearned; the sum of £115,000 was added to the provision in order to maintain the percentage.

UNDERWRITING PROFIT: Your Directors are indeed pleased to place before you an Underwriting Account showing a profit of £123,630 practically the whole of which will materially assist in restoring the Reserve Fund when effect is given to the proposed capitalisation of profits held in reserve. PROFIT AND LOSS ACCOUNT The transfer from the Profit and Loss Account to the Profit and Loss Appropriation Account amounted to £190,760 made up of £123,630 Underwriting Profit, and £67,130, being income from the invested assets. The last mentioned item is £4744 in excess of the 1959 figure and it can fairly be said that the increase came about automatically, because of the additional amounts retained in the business, by way of reserves and provisions, last year. I draw attention to the Income from “Other Investments” by stressing the likelihood of fluctuations in this item from time to time. That particular income may in one year include a fairly substantial credit representing interest received on short-term funds deposited by the Company, where as in another year the income may be debited with the interest cost of temporary borrowings by the Company; further, expenses in connection with repairs and renovations to freehold properties were considerably below the average, hence the additional debit of £5125 by which sum the Repairs and Maintenance Reserve was increased. Next year will undoubtedly call for a reversal of the procedure because of substantial commitments for alterations and repairs to the Company’s Sydney, Brisbane and Auckland properties, the total cost of which will certainly exceed the yearly average. PROFIT AND LOSS APPROPRIATION ACCOUNT There is an available balance

this year of £232,795 made up as follows: £ Amount brought forward from last year 62,868 Less Interim Dividend of fivepence per share paid in May, 1960 .. 20,833 £42,035 Add Underwriting Profit for the year .. 123,630 Add Income from Investments for the year 67,130 £232,795 Your Directors have dealt with that balance by transferring £120,000 to General Reserve, and by recommending that (a) a final dividend of elevenpence per share, £45,834 be paid (making the total dividend distribution for the year Is 4d per share), and that (b) the sum of £66,962 be carried forward to next year. Needless to say it gave great pleasure to your Directors to recommend a further increase in the total dividend distribution, the additional amount of £4166 being fully covered by the higher income from the invested assets. BALANCE SHEET Perhaps the item “Sundry Creditors” in the Balance Sheet is the only one which merits an explanation from me; the increase of £124.659 in this respect is mainly due to the purchase of securities at the end of the year not then paid for, amounts due under building contracts, approved but awaiting payment, and increased balances due to reinsurance companies. STAFF During the year, I and other members of the Board, have had exceptional opportunities to visit quite a number of the Company’s Branches in New Zealand, Australia, and also our London Branch, and I am more than happy to tell you that the interests of Shareholders are in the safe keeping of loyal and capable staffs; the Company is indeed fortunate in this respect and I have no doubt whatever that you will endorse the Board’s action in paying a bonus to the staff members who have done so well for our Company. THE MOTION I now formally move the adoption of the Report, the Statement of Accounts and the Balance Sheet, for the year ended September 30, 1960, which, if carried, will authorise the payment of a final dividend of lid per share. The motion was seconded by Mr M. W. Bevan, who said that the National Insurance Company was a very sound institution and a credit to the pioneering instincts of business men in Dunedin. SPECIAL DIVIDEND On the motion of Mr R. H. Stevenson, seconded by Mr P. Fels, the following resolution was “That a dividend of five shillings (ss) per share be paid on the 15th day of December, 1960, out of profits derived prior to the 31st March, 1957, now standing to the credit of General Reserve, such dividend to be applied in satisfaction of the call of five shillings (ss) per share made by the Directors of the Company and

due on the 15th d*y of December, 1960.” SUBDIVISION OF CAPITAL On the motion of Mr E. O. Hunter, seconded by Mr M. Sidey, the following resolution was carried: “That on the 15th day of December, 1960, each of the existing 2,000,000 .one pound (£1) shares in the capital of the Company be divided into two shares of ten shillings (10s) each, making a total of 4,000,000 ten shilling (10s) shares, and that upon each of the issued shares which, after subdivision, will number 2,000,000, the sum of seven shillings and sixpence (7s 6d) shall be credited as paid up AND THAT new share certificates be issued for such 2,000,000 issued shares in place of the certificates for 1,000,000 £1 issued shares. AND THAT, in compliance with Clause (d) of sub-section (1) of section 1448 of ‘the Land and Income Tax Act, 1954,’ such new certificates shall have endorsed thereon a notification to the effect that in respect of the shares therein referred to 2s 6d is paid up by a 1960 bonus dividend.” VOTE OF THANKS Mr C. R. Nicholson moved a vote of thanks to the Directors and Staff, during which he emphasised the responsibilities of Directors in managing the affairs of public Companies. He also referred to the loyalty and efficiency of the Staff. The Chairman replied briefly on behalf of the Directors and the General Manager, Mr J. W. Delbridge, returned thanks on behalf of the Staff. (Extended report by arrangement.)