Standard collapse recalled

Press, 2 August 1979, Page 8

Standard collapse recalled

Reminders of the Standard Insurance Company’s collapse are still coming to light, 18 years after the event. Mr A. R. Granger, the last of Standard’s Christchurch employees still working for the company’s successor, retired yesterday. Mr Granger joined Standard in 1938, and was reemployed by the National Insurance Company in 1961 after Standard folded. He has worked for National ever since. The Standard Insurance collapse had the same impact on the business community ' then that the Securitibank affair did 15 years later. Standard was formally wound up in May 1961, owing £1.36 million and expecting a deficit of £670,000 after the realisation of assets. Standard had been one of the “big four” among New Zealand-owned insurance companies until then, and was regarded as a gilpedged investment

Its collapse was caused by liabilities incurred by what was described at the time as the “unauthorised issue” of bond guarantees from the company’s Sydney branch. Credit restrictions in Australia prevented the principal debtors from meeting the bonds, and Standard, as guarantor, became liable. The last of the company’s creditors is believed to have been paid about six months ago, at a rate of about 80c in the dollar. Standard’s shareholders suffered, however. It was often the practice at that time to require only half the value of shares be paid. After the collapse shareholders were required to pay the outstanding 10 shillings in their £1 shares. Few companies in New Zealand now issue shares on the same basis, at least partly as a consequence of the Standard crash. In the succeeding years many either called for the additional

money, or made shares fully paid by issuing bonus shares. Mr Granger said that the company’s collapse had “rocked the whole of New Zealand.” It came with no warning to 'its employees, who learned of it on the same day as they read the newspaper billboards. His job and those of his fellow employees, however, were immediately guaranteed by National when it took over. Standard was “quite a tidy set-up,” Mr Granger said. “It was regarded as a very conservative company. When it collapsed the financial world was really shaken.” Mr Granger has since worked as an insurance inspector, the last 10 years as a resident inspector for Wrightson N.M.A. He is now 60 and has retired “to do up my new house and plan some extensive: travelling.”