THE ACCOONTS OF TEN BRITISH FIRE OFFICES.

New Zealand Herald, Volume XXIV, Issue 8065, 5 October 1887, Page 6

THE ACCOONTS OF TEN BRITISH FIRE OFFICES.

The year 1886 was ono which brought great good fortune to the sturdy old Britieh fire insurance companies, which, with bull-dog pertinacity, have clung to the methods that deserve success through a cycle of disaster aud loss. After several years of bad business, there was a dawn of a better day in 1885, culminating in fair weather in 1886. A few figures relating to the ten principal English companies doing business in the colonies will illustrate the improvement which has taken place. They are as follows : 3881 1 18:15. 1886. Premium Income of teu companies .. £7,629.110 £7,611,900 £7,584 062 Losses .. .. 5.C04.720 4,463,702 4,845 066 From 1884 to 1886 there has been a decrease of £45,057 in the premium income, but during the same period losses have diminished by £859,655. The measures which have brought about this great improvement are principally the pruning off of unsound branches of business, keener supervision, and improved rates. It may bo said that improved rates are hardly compatible with a slightly diminished revenue. Bat against this must be set the business which has been abandoned, and the decline an the gross aiuouut insured, occasioned by the almost universal fall in the prices of merchandise. We do not say that the lessened losses are altogether due to closer management or better rates, for the result has been influenced largely by the lighter incidence of Berious fires. The calendar year is not, in point of fact, a sufficient period within which to experience ail the liabilities to loss in a business that requires time wherein to pass through its regular oourse, and it is quite possible that instead of contrasting 1884 with 1886, it would be more proper to treat- 1884, 1885. and 1886 as a distinct period. Nevertheless it is convenient to adopt the more artificial method ot comparing the results of isolated years. The lightening of the burden of the losses will be more apparent by taking out their ratios to premiums, as follows :— 1884. 1.'85. 1886. Loss ratio.. 65.60 [i.e. 58.64 p.c. 67 29 p. c. Taking 60 per cent, as u healthy point, It is evident that the ten companies in question have flourished during the last two years. But the fly in the pot of ointment is the inveterate propensity for expenses to increase, and a wide field for conjecture presents itself as to when a term is to be set to such, increase. The sums spent in procuring and administering the business of the ten companies for the last three years have been as follows :— 1884. 1885. 1886. Commission and expenses ... £2,312,919 £2,836,594 £2,407,928 Here we have an t noreaie in two years of £95.009, against a decrease of £45,057 in the iiio-ime, the gum of the differences being £140,066 The ratios to premiums have been as follows:— 1834. 1885. 1886. Commission and expunges ratio .. 80.82 p.c. 30.70 p. 31.75 p.c. After adding these percentages to those relating to looses, we get the following percentages of underwriting profit:— 1884. 1885. 1886. Underwriting profit 4.08 p.o. 10 66 p.c. 10 08 p.c. The groat increase in charges in 18S6 has almost neutralised the improvement in the loss ratio. ' It should be observed that the principal increase is in tho expenses of the management, that in commission being much less in amount. One of the companies included in this survey does not discriminate be* tween the two branohes of expenditure, but we have the following comparison relative to the other nine companies 1884. 1885. 1886. Premium Income .. £6,833,953 £6 813,425 £6,848,858 Expenses of managemot .. .. 968 026 997,470 1,037,166 Commission .. 1,099,740 1101,036 1,135,898 We deduce from these figures the following sets of ratios:—Expenses of management, 18S4, 14.16 per cent; 1885, 14 64 per cent.; 1886. 15.14 per cent. Commission, 18S4, 16 08 percent.; 1885, 16.16 percent.; 1886. 16 58 per cent. Expenses of management have increased by 0.98 per cent In two years, and commission by 0.50 per cent. line more point. Ihe paid-up capital of the ten companies whose accounts furnish the material for this brief notice, amounts to £3 683 952 (of which by the way £1,150,000 consists of capitalised profits.) The underwriting profits for 1884 were .£311,180 ; for 1885, £805,064; and for 1886, £831.069. The percentages of these profits to capital have therefore been as follows :—IBB4, 8.45 per cent.; 1885, 21 85 percent. ; 1886, 22.55 per cent. The business is consequently of a lucrative character, apart from the interest received on oapital and reserves, which in the aggregate greatly exceeds the underwriting profits. Talcing the foregoing comparisons as indicative of the state of affairs with the remainder of the British fire offices, it is evident that the year 1883 was a very satisfactory one. That the improvement noted may speedilv become the experience of the colonial offices also, is a thinu greatly to be desired.lnsurance and Banking Record.