SOUTH BRITISH INSURANCE COMPANY.

New Zealand Herald, Volume XXV, Issue 9182, 11 October 1888, Page 6

SOUTH BRITISH INSURANCE COMPANY.

GENERAL MEETING. DIVIDEND OF EIGHT PER CENT. PER ANNUM. The general meeting of the shareholders of the South British Insurance Company was held yesterday morning, at the offices, Queen-street. Captain Daldy, Chairman of the Board of Directors, presided. There was a large attendance. The Chairman having announced that the report had been in the hands of the shareholders for some days, it was put to the meeting and decided to take it as read. The report is as follows : REPORT AND BALANCE-SHEET Presented at the General Meeting of Shareholders, held at the Office of the Company, Queen-street, Auckland, on Wednesday, 10th day of October, 18SS. The directors have the honour of placing before the shareholders the statement of accounts and balance-sheet for the year ended 31st August last. The income, including the balance brought forward from last year, is £256,953 19s 4<l ; the general expenditure is £246,402 Ss ,=>d ; the balance to credit to profit and loss account at the close of the books was £10.551 15s lid. Your directors recommend payment of a dividend at the rate of S per cent, per annum (less interim dividend). Should tho dividend as recommended bo sanctioned by the shareholders, it will be payable at the head office on IKb instant, and at tho several branches and agencies on receipt of advices. It will be the duty of the shareholders to elect two directors in the place of W. C. Daldy and T. Morrin, Ksqs., who retire in accordance with the Articles of Association, but who are eligible, and offer themselves for re-election, and to elect auditors in the place of J. Waymouth and J. Friar Clarke, Esqs., who retire, and offer themselves for reelection. For the Board of Directors. W. C. Daldy, Chairman. Auckland, 10th October, ISSS. STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31ST AUGUST, 18S8. Profit and Loss Account Dr. £ 8. d. To dividend paid October, ISS" .. .. 5,170 ilO Dividend paid April, ISSB 5,170 « 10 10,340 9 8 Fire and marine losses: Paid and outstanding 175,585 15 8 Agents' commission, salaries, and other expenses 51,358 19 3 Advertising, printing, and stationery 4,522 0 9 Underwriters' Association and fire brigades 1,923 15 3 Government licenses, rates, and taxes 2,426 7 5 Amount written off office furniture 264 8 5 Balance 10,551 15 11 £266,953 19 i Cr. By balance from last year 5,593 3 3 Fire and marine premiums (less re-insurances) 240,079 11 9 Interest received and accrued .. 8,281 4 4 £256,953 19 4 Balance-sheet. Dr. £ s. d. 3 s. d. To Capital—Paid up .. 129,256 0 0 Reserve fund.. .. 80,000 0 0 Investment— Fluctuation reserve .. 2,753 2 9 Profit and loss .. 10,55115 11 222,560 18 S Unpaid dividends 86 9 6 Appropriation for unpaid losses .. 27,457 0 0 Outstanding accounts .. .. 55 17 7 £250,160 5 9 Cr. By landed properties and loans on mortgage .. 90,549 9 S Stocks, debentures, and Government bonds .. 40,779 14 I Fixed deposits with banks .. .. 53,052 4 1 Cash on current account with various banks, and bills of . exchange in transitu 9,500 11 8 193,881 19 8 Balances at branches and agencies 42,851 18 9 Bills receivable 3,632 16 10 Outstanding accounts .. 6,793 19 2 Office furniture 3,000 0 0 £250,160 5 9 We have examined the above balance-sheet and accounts, and compared them with the books and vouchers, and found them to be correct. We are of opinion the balance-sheet is a full and fair balance-sheet, containing the particulars reouired by the company's Articles of Association, and properly drawn up so as to exhibit a true and correct view of the state of the company's affairs. J. Waymouth. I Auditors J. Friar Clarke, / AUcmors Auckland, 10th October, 1888. The Chairman, in moving the adoption of the report and balance-sheet, said :— Gentlemen, —The report and balance-sheet now presented to you is less favourable than your directors anticipated from the returns to hand a few weeks before closing our year. Numerous marine losses during the month of July destined these anticipations ; however, the present is an improvement on the last-, although not what we could wish. The net premiums are £4900 in excess of last year, although we have paid £12,000 more for exchange and reinsurance business, proving that although we have reduced our lines and discontinued risks that had proved unprofitable, our business is steadily increasing. There is a slight decrease (£220) in the interest account, arising from lower rates for deposits and changes in our investments. The losses are £1300 in excess of 1887, and expenses £360 less, showing the profit on underwriting is about £4000, or 2 per cent, on premium income; losses, £175,000, or 73 per cent. ; expenses, 25 per cent. You will naturally say, "this is a very poor return; how can you account for it?" The only reason I can give is inadequate rates, caused by extreme competition and depressed state of trade, for we have no exceptionally large amount in any one loss, but losses have been very numerous in both fire and marine. Neither have we had any marine losses on inferior ships, but all have been A 1 risks. With regard to the fire section, with the exception of one branch, New Zealand has shown loss ; but we fully anticipate, from what transpired at the recent meeting of the Underwriters' Association, thatmeasures will be taken to harden rates and equalise tariffs. I have no special remarks to make on our various branches. London has now been consolidated, and brought into thorough good working order, ana we feel confident that we have laid the foundation of a safe, and we hope a profitable, business in the future. California : Since this branch has been placed solely under our own management the results have been satisfactory. The business is steadily increasing, and the fire ratio is below the average, showing a fair profit. The Cape shows an improvement, also the India and China branches. Australia and New Zealand have been our worst points this year, especially in marine. Reviewing the operations of the year, we feel that although not showing such an improvement as we could wish, on the other hand our business is more consolidated and in better form than at any time during the past four years. Ourinvestments also are in a most desirable form, so that we can avail ourselves of them at any time, and they have been written down to the lowest point. All the accounts are as close up as possible. Altogether I must congratulate you upon the present position of our company, and after the very trying times which we have had during the last few years, and now that we are apparently in smooth water, your directors feel they aro entitled to the confidence and support of the shareholders. In conclusion, I would add that should the general "expectation of a revival of trade throughout the world be realised, our company is in a position to take advantage thereof ; and our next report should show better results. With these remarks, I beg to move the adoption of the report and balance-sheet. With respect to the items in the balancesheet, I am glad to say the balances at branches and agencies are £17,000 less than last year, thus showing that our managers have used their best endeavours to keep the accounts as close a 9 possible. The losses are .slightly in excess of last year (about £1200), and the unpaid losses show only a difference of about £60. One good feature you will no doubt notice : the outstanding accounts are £56 only as compared with £15,796 last year. The investment fluctuation account shows an increase of £500. Although we have been obliged to write off some losses, these have been more than counterbalanced by securities realised, and by the increased value of others. During the last three or four years the auditors have been placed in possession of certificates from well-known experts,. wherever, such securities are situated, consequently they show in our books at present depressed values, and should there be a general improvement in trade and property, we may confidently , look for this fund being considcrably augmented. Mr. W. S. WrLSON seconded the tnotion.

Mr. Ralph Keesing said he had no objection to make to the passing of the report and balance-sheet, but there was one item upon which he would like a little information, viz., "agents' commission, salaries, and other expenses, £51,338 19s 3d."

This amount appeared to him to be very large on the business done. He had no doubt that the directors did their best in the way of curtailing expenses, bub he should like to know, taking this as a special item, for the sake of the "shareholders and of the business generally, whether this large amount could not be brought down materially ? He considered that for the half-year just passed the shareholders should have received 8 per cent., and he was looking for this to come out of the item he had named. It appeared to him anomalous— lie did not Know how it appeared to other shareholders—and he believed that if the directors would in their wisdom tackle this item, they would make a very material saving. He simply asked the directors if they would take this item into their serious consideration. Mr. D. G oldie did not think the report a favourable one, and he did nob think the chairman's reasons for the statement put before them were correct. He thought the better plan of ascertaining whether the thing had been properly managed or not was to compare the working of this company with that of another across the road—the New Zealand Insurance Co. It was his opinion that if they thus compared the working of the respective companies they would not be led to see that their directors had done the best under the circumstances. Mr. Goldie pointed out that during eight years the South British Insurance Company had made a loss on underwriting of £6393, whilst the New Zealand Company had made a profit, and they did not seem to be able to produce the same results which the latter company had produced on the same income. They had been told that if they wanted brains they must pay enormous salaries; unfortunately, they were paying enormous salaries without getting the brains. In the early history of this company the thing was running for about 17£ or 17J P er cent., but during the period they had been paying largest salaries, and the thing had been working on the most extravagant lines, they had been going to the bad at an enormous rate. He thought that | the shareholders should get something more than the miserable pittance they had been getting. It seemed to him that the directors and the officers of the company had been mopping up, leaving little or nothing for the shareholders. Mr. Goldie pointed to a large picture with gilt frame, containing photographs of the directors, and said they had only to look at that to see the folly of the company in going to extravagance of that kind in the face of the fact that the shareholders were many of them poor widows who did not. receive from the company enough to keep them alive. He believed that many of the officers of the company were receiving salaries higher than those of Cabinet Ministers, and he thought the time had come when it should be insisted that these companies should be worked for the benefit of some one other than the directors and officers. They would then do a safer and more economical business, and the shareholders would get something for the money put in. (Hear, hear). Mr. Elkin said he had received a statement showing that for the past seven years they had been conducting the underwriting business at a loss of '38 per cent. That was not a subject for congratulation, though they had possibly got to the end of the down grade ; and he thought the fact he had mentioned supported the remarks of Mr. Goldie, and took away from the credit which the directors took to themselves for managing the company. There were too many competing companies apparently in this small community, and just as with another important industry, they seemed to require amalgamating, so as to reduce the cost of working; otherwise the weakest would have to go to the wall. When they had lost so much in the consecutive three years, there seemed no reason why they should not lose in the next three years. It might not be so, but it wa3 quite evident that they were not doing a paying business. It was evident that the company had been paying dividends when they were not fairly earned. He did not agree with the auditors that the balance-sheet was a true and correct statement of the affairs of the company. Mr. Elkin mentioned that clause 93 of the articles of association stipulated that no dividend or bonus should be given unless all expenses,liabilities,etc.,were taken into consideration, and he claimed that there was an undisclosed liability hanging over this company that ought to have been taken into account in the balancesheet err in the profit and loss account, or in both. Allowance should have been made for unpaid losses, and it must be evident to the meanest understanding that there was an immense risk hanging over the company which would crop up at some future time, and which ought to have been taken into account. He did _ not know whether their risks could be re-insured, but it was certain that they had a very large number of claims which must absorb, or very nearly absorb, the reserve fund. He saw that the New Zealand Insurance Company had provided for this by a reinsurance fund, and one of our local companies — a much smaller company than theirs—had entered into a statement of what the cost would be to reinsure all their liabilities. In order to present a proper estimate of the value of the shares for both buyer and seller, they ought to take into account that unknown liability, or put a footnote stating that the risks unexpired amount bo so many thousand pounds. In the case of the smaller company to which he had referred they amounted to £39,000, and ho know those of this company would be very much larger. From year to year a system was followed at the election—it might be said that he wanted to be a director, but he did nob; there was no chance of his going in or anybody else going in because they had a system of giving a vote for each share. He never heard of such an abominable system ; and ho contended, that while property should be represented to its proper degree, it was a monstrous thing that any man with 2500 shares should have 2500 votes, and that there should be any system of manipulating the votes. (" Question.") This was the question. He felt dissatisfied with the management, and if he could get out of the company to-morrow, without losing too much money on the shares he held, he would do so. He contended that the balance-sheet was not such | a one as the articles required, and it did i not show the true position of the company. ' Mr. Nelson : What is the profit on the ■ year's business, independent of the invest- j ment ? The Chairman : £4000. Mr. Nelson : Well, I think this profit is not commensurate with the risk run. The Chairman, in reply to the various speakers, said that the expenses were 27 per cent, two years ago, 26 per cent, last year, and 25 per cent, this year, an I they were doing all they could to reduce them. These were not the expenses paid to managers and sub-managers—it was the question of getting the business together. They were aware that any agent whom they employed in the country they had to pay 10 per cent., the cost of getting the busi- j ness together. He believed they were j doing a lower ratio than any company in I New Zealand, and if they took the English [ companies they found that they paid 30 or 35 j per cent. This was a time, of retrenchment, j but if they carried retrenchment too far , they would destroy efficiency. Mr. Goldie j had referred to the working of another company ; he (the chairman) had especially avoided this, not that he did not take a note of what other companies were doing, but he | knew that it was an invidious thing to make ; comparisons. The New Zealand Company was established many years ago in flourish ing times before this company, and the Ni Zealand Company was backed up by ijthi.tary institutions, which had given then: power which they (the South British • never possessed. The income of the lat • was equal to theirs, but that income w.:. raised by the shareholders giving the dire : tors permission to go into foreign business. They never had tho support c-i a large monetary institution as that company had had in the past and at the present time. The business of the latter < company had been much larger in marine than that of theirs, and the New Zealand i Company had wool, and in other respects ' had a larger business. They (the directors) ! could only submit to the shareholders that ! they had done their best, and they had : come forward with a statement which could 1 be backed up in every particular; and he ! asserted that there was no company in the j southern hemisphere whose accounts and | affairs generally were in a sounder condi- j tion than that of the South British. (Hear, I hear.) Their reports and accounts could be supported in .every way, and no company was in a better position for business than they were at the present time. If they looked to their fire losses they would j find them smaller than what was stated—

they must not bo guided by newspaper reports its to what the liabilities of companies were. Their re-insurance came close upon £100,000, and they had increased that by £12,000 this year ; and who then could say that they were nob doing a safe business? Like other companies, they had lost money, but they had always come out better than other companies in the same business. It should also be borne in mind that business during the last year was very unfortunate, and there was no distinction in their losses ; but they had their lines so low that they still came out with a profit. Mr. Elkin had said that there was too much competition ; this was just the whole of the matter, and the weakest were going to the wall, but at the cost of theirs ana other solvent companies. He might say that they were now negotiating to take over another company, and he believed other companies would have to be absorbed by amalgamation, business being thus strengthened. There was no undisclosed liability. They had the £80,000 reserve fund invested in good securities, which it was proposed should meet that liability if necessary ; and this he hoped and believed would never happen with the South British Company, which was a progressive organisation. He denied in (oto that they had ever divided profits which were nob earned. Mr. Elkin seemed to forget that they had interest. Captain Daldy pointed out that the auditors had demanded, and had had placed before them continually, reports from experts on the subject of the accounts. The question of one vote for every share was a matter for the shareholders, not for the directors. They (the directors) had done nothing that they were ashamed of, and they had the right to ask the shareholders to re-elect them. (Applause.) Mr. Nelson said he quite agreed that the investment account was quite safe. It appeared to him a very strange thing thatsince Mr J ohnston had been appointed manager the affairs of the company had gone all wrong. During Mr. Boardman's time there had been none of this business. Mr. Nelson spoke at some length, attacking Mr. Johnston's qualifications as manager. The Chairman said they were reaping what they had sown. A few years ago, in prosperous times, they consented to give 15 per cent,, and they also capitalised and this policy, which he had opposed, had crippled the company up to this period. He could say that Mr. Johnston was paid much less than many managers of smaller concerns. Any reflection upon Mr. Johnston was nob warranted ; any blame must be cast upon the shareholders and the directors. (Applause.) The manager was not left alone to conduct the business ; the directors met twice a week, and all matters were laid before them. At this time, when they were getting out of trouble and into smooth waters, it was not the time for them to cast up these things to one another. Mr. Goldie considered that it would be useless to nominate any new man for the directorate, for if this were done every officer of the company throughout the world would go to work to get proxies for the men the directors wanted, so that outside shareholders had no chance at all.

The Chairman : I deny that that is the case, Mr. Goldie. Mr. Goldie said he could prove it. He had stood for the directorate, and found when he applied for proxies in England that he had been forestalled by the officers of the company themselves. Mr. John Lamb thought the directors should be supported. They had done their utmost in the interest of the shareholders, and deserved their best thanks.

Mr. R. C. Barstow, in reply to Mr. Goldie, said that when he stood for the directorate he wrote to only one agent in England, and not to ask him to canvass in his interest, but to ask the addresses of some of his friends to whom he wished to send proxies. He was the only agent or manager of the company whom he (Mr. Barstow) addressed in any shape or form. Mr. Peacock, who was above average capacity, would, he considered, take fully a year, as he himself had done, in becoming acquainted with his duties as a director ; and when he (Mr. Barstow) sat at the Board he felt that during the first year of his office he was of no use to the directors.

After further discussion the Chairman, in reply to Mr. Keesing, promised that the directors would consider the item " agents' commission, salaries, etc." The Chairman said that Messrs. Hobbs and Peacock had done important business on behalf of the company during their stay in Wellington. Mr. Hobbs said that though he and Mr. Peacock were absent in Wellington they had always desired to know all the business being transacted by the company, and to be consulted on all matters. They had consulted other members of the House who were agents and local directors of the company in other places, and he considered they had done the company good service, and that without pay. Mr. Elkin had given them good reasons to-day—as good reasons as if he had been on the Board of Directors —as to the prospects of the company. It was stated that there was too much competition, but the directors could not help that. If the company had got to the end of the down grade that was a matter that both directors and shareholders might congratulate themselves upon. The auditors were not content merely with taking the papers as put before them ; they considered everything, and demanded that all papers should be laid before themin fact, they took upon themselves to do things that he had been astonished at, and he pledged his word that their report could be thoroughly relied on. He could assure them that there was nothing that the directors had not disclosed, and if Mr. Keesing would come into the office Mr. Johnston would give him the fullest information on every point-. They desired efficiency in the service, and they could not underpay their men, or have them taken away by other companies. He was never more satisfied with the prospects of the company than he was at the present time. Now was not the time to complain ; and he hoped the shareholders would assist in increasing the business of the company, instead of damaging the property. He did not object to criticisms, but he did not think it was right to make insinuations about the directors, auditors, and | general manager which were, to say the i least, uncalled for. ! The report and balance-sheet were unani- ; mously adopted, i directors. i On the motion of Mr. J Batger, seconded by Mr. S. E. Hughes, Captain Daldy was re-appointed a director. Mr. Thos. Morrin was also appointed, on the motion of Mr. W. S. Wilson, seconded by Mr. J. H. Harrop. auditors. The remuneration of tho auditors was fixed at '-1 100, and Messrs. A. Boardman and J. Friar Clarke were appointed.