NATIONAL INSURANCE

Evening Star, Issue 23744, 27 November 1940, Page 8

NATIONAL INSURANCE

COMPANY'S ANNUAL MEETING DROP IN PREMIUM INCOME The annual meeting of shareholders in the National Insurance Company of New Zealand Ltd. was held this afternoon. Air G. K. Ritchie, chairman of the board of directors, presiding. Moving the adoption of the annual report ami balance sheet, Mr Ritchie pointed out that after showing a steady increase for the past few years, the premium income, in comparison with the 1939 figures, showed a drop of £10,34-2. This was mainly attributable to the accident department, particularly the motor vehicle section of it, the principal reason being the falling off in the imports of motor vehicles and the petrol restrictions. In addition, it had been found necessary during the past to relinquish some business which had proved to be consistently unprofitable. The control by the British Government of raw materials and commodities had also affected the marine income. This had, however, been partly set-oil by an increase in war risk premiums, but this class of business was of a highly speculative nature, and consequently it was being underwritten on conservative lines. It was satisfactory to find that the reduction in the amount of losses, £15,995, was greater in proportion than the fall in income, resulting in a substantial improvement in the loss ratio. The ratio of expenses to net premium income was considerably higher than last year. This, however, was almost entirely due to increased taxation. After making the customary appropriation for unearned premiums, the net profit from underwriting was £31,861, which was an improvement on the figures of the former year, and after taking the existing conditions into consideration, might bo regarded as satisfactory. Reserve for unexpired risks was just over 50 per cent, of the net premium total, which could be considered satisfactory. The percentage established by custom and experience ranged from 40 to 50 per cent. “ The nature and purpose of the unexpired risks reserve is evidently not generally understood,” continued the speaker, “ and m case any of you here are in any doubt as to the object of it, I will make a brief explanation. As you are aware, msurance policies are issued at varying dates throughout the year, commencing with the first day of the period covered by the company’s accounts and ending with the last. Consequently, at the end of thq company’s financial year many of its policies are still unoxpired and it has been the practice to make provision in the annual accounts of companies for an amount (usually referred to as the unexpired risks or unearned premium reserve) estimated to represented approximately the unearned portion of the premiums on policies issued or renewed during the year. This amount varies in accordance with the practice of individual companies. For many years 40'per cent, of the annual premiums was considered sufficient, but during recent years this has been increased by numbers of companies to 50 per cent., and this latter is the figure adopted by this company, and on which the present year’s unexpired risks reserve has been calculated.”

The return from interest and rents showed an increase of £7ll, hut after the deduction of taxation applying to it was less than the amount of last year by £3,137.

After taking into account the amount brought forward from last year there remained a balance of £95,255. From this an interim dividend was paid in May last, and the directors had dealt with the balance as follows; —

A transfer to general reserve account of £10,000; addition to taxation and contingency reserve, £5,000; write down freehold properties, £5,080; and they now recommended the payment of a final dividend of 5d a share (£20,833); making the dividend for the year 9d a share, a total distribution of £37,500. Carried forward to the current year would be a balance of £37,673. COMPANY’S ASSETS. The assets of the company, as recorded in the balance sheet, both freehold properties and other investments, represented a total well below their market or negotiable value. . , •* Speaking generally,” said Mr Eitchie, “ I may perhaps express the confident opinion that the position of the company is sound and eminently satisfactory. Our business at all points is of a safe character and thoroughly known to all officers, by whom we are also undoubtedly well served. The directors have always aimed at securing an even dividend and a gradual but constant strengthening of tbe company’s resources, ■which is the foundation of all sound insurance business, and I may say that I think they have succeeded in bringing matters to such a position as to give those results with as much certainty in the future as can be attained. I hope, shareholders may take this view and have such a permanent interest in the company as will induce them to do all they can to increase our premium income. “ Those responsible for the conduct of this company’s business builded wisely in the past. I read in the first half-yearly report in 1874: ‘The directors have to,congratulate shareholders, not only on the amount of business done, but on the prospects of the company for the future. Branches have been opened, not only throughout New Zealand, but also in Melbourne, Sydney, and London.’ Truly they had vision. The paid-up capital of the'company was then 'under £50,000.” YEAR’S DEVELOPMENTS. The past year had not been without its difficulties, common to* most business concerns. Not the least of these was that of staff. In this respect the company was less favourably situated than in the Great War of 1914-18, when the average age of the personnel was considerably higher than it is to-day. In consequence the proportion already serving in the overseas forces was high. In fact, in New Zealand, of the unmarried members of the staff between the ages of 21 and 45, only three were still with the company, and all of these had been rejected for military service as medically unfit. Those of the staff who remained were cheerfully and competently shouldering their additional responsibilities, and in this connection the speaker particularly referred to the work of the London staff, and also that of agents. “To them I think the following paragraph which appeared in a well-known London insurance magazine recently is particularly applicable,” he continued.

“ When in tlie future historians catch up with the story of these fierce and fiery days they will record that not least amongst the many causes which led to the downfall of demonolalry was the determination of the simple man to hold on tenaciously to the essential routine of his daily life. No hero to himself, he proves heroic in his steadfast continuance in the common task. He may show irritation, but rarely fear. He does not mind the idea of dying, but does object to being pushed off this mortal coil by unpleasant brigands.” In view of the favourable results of the past year, the directors had granted a bonus to the staff, which he felt certain would meet with the approval of shareholders.

It was with deep regret that he had to advise the deaths on service during the year in France of Mr R. Kemp, of the Loudon staff—a most promising member—and in Australia of Mr H. P. Smales whilst acting as an instructor in the Royal Australian Air Force: and also of a former member of our staff, Mr D. G. Cobden, who left before the war to join the R.A.P. and who was shot down over the Thames Estuary.

“ I am sometimes asked,” the speaker concluded, “ what will be the effect of the present war on the business of insurance companies generally and in particular that of tho National Insurance Company. To this I can only answer that an insurance company follows the prosperity of the countries in which it conducts its business. With the exception of marine, ours is, as you are no doubt aware, mainly confined to the New Zealand and Australian field. The end of the war is not in sight, and I do not think that anyone is competent to say what the economic effect of it on these countries will be.”