INSURANCE YEAR

New Zealand Herald, Volume LXIX, Issue 21325, 28 October 1932, Page 14

INSURANCE YEAR

SOUTH BRITISH COMPANY STRENGTH OF FINANCES PREVENTION OF FIRE LOSS •' The financial strength of tho company to-day reflects the principle adopted 40 years ago of limiting dividends to the income from investments," said Mr. W. R. Wilson, acting-chairman of directors of the South British Insurance Company, Limited, at the annual meeting yesterday. " Although this policy has not been followed with literal exactitude this year, during the period in which the practice operated the sum distributed iri dividends is substantially lower than the income received from investments. Referring to the underwriting account, Mr. Wilson said that losses were less by almost £IOO,OOO. Fire, marine and accident insurance) was liable to variations of fortune in the matter of losses, and the year happened to be one when fortune was kind. Another factor probably contributed to the result, the practice of which in normal' times would go a long way toward reducing a national waste, and, incidentally and consequently, to lowering the cost of insurance. This wa& the sense of carefulness awakened by tho necessity for economy, and by the uige to make the best use of what one possessed. Easier times had rendered this dormant, and its revival was making itself felt in all sorts of ways, including the preservation of property from loss by fire. It was under conditions like those to-day that it was more generally realised that destruction oi property by fire was a national waste and therefore a loss of capital to the country. Reduction in Premiums " Premiums, when compared with those of the previous year, show a reduction," said Mr. Wilson. " This is due principally to the same causey that accounted for last year's fall, namely, reduction of values, decreased trade, and smaller totals paid in wages. An additional factor, in itself the result of these conditions, is the widespread laying-up of motor vehicles, with a considerable effect upon the premiums from what has become a very important class of business. " There is a moderate reduction of expenses after making provision for increased income ta* and for restoring for this year tjie company's usual contribution to the European staff provident fund. Nothing is more difficult than to adjust expenses in relation to a falling income, so that the rate should not rise. As the business of insurance is by no means free from this problem, although the amount of expenses this year is_ less, the ratio to premiums is slightly higher. The reserve for unexpired risks has been left the same as it was last year, and the balance carried to profit and loss account is £60,255. "In that account, the income from interest and rents is lower by only £4745. This year we had the benefit of a substantially larger rental from the Melbourne building, owing to the termination 18 months ago of a long lease at a comparatively low rental. The effect of legislation reducing interest and rent did not apply to the full year. A larger fall may be expected during the current year. War Loan Conversion "The successful British war loan conversion had an immediate effect on other stocks, which at once commenced to rise, and in some cases heights have been reached in marked contrast to the low levels of a few months ago. Lack of evidence of any material improvement in the prices of raw materials and produce generally discourages any idea that this change for the better in borrowing power, as indicated by rate of interest paid, may be due to improved economic conditions. On the contrary, the change seems attributable chiefly to the accumulation of capital for which, owing to depressed conditions of trade, there is little outlet, and which is seeking safe investment even at progressively lower rates of interest. As will be readily understood, these conditions do not lessen the difficulties of making suitable investments. "On the other side of the profit and loss account, £40,000 has been written off properties. This has been done in view of lower rents, not, unfortunately, accompanied by a commensurate reduction of rates and taxes. In the balance-sheet on the assets side the sum represented by properties is less by £35,856. Tho difference between this sum and the above amount is due chiefly to final payments on our new building in Capetown. Tribute to Staff "Plans are being prepared for additions to the Melbourne building, which will bo proceeded with if satisfactory tenders are received. Tho building requires renovating, and it is proposed to take advantage of this opportunity to make additions which tho value of the site calls for. Plans are also being prepared for the erection of a building of two storeys ou tho site of our former building at Napier. In the other assets, the item cash in banks and short-dated investments, at £246.293, is some £90,000 more than it was last year. "While the directors are concerned with matters of policy, it is upon the staff that tho responsibility rests of satisfactorily conducting the business of the company. We are in the happy position of knowing that the spirit of team work throughout the whole of our staff is the best guarantee of service, alike to the public and to the company. I also wish to express tho board's appreciation of the services of the company's local directors, advisers and agents throughout the world, whose co-cperation and support have contributed materially to the satisfactory results' of tho year's operations." The report and balance-sheet were adopted. A dividend of Is 4d a share, making the total distribution for the year the unchanged amount of 2s Bd, was approved. The retiring directors, Mr. E. R. N. Russell and Mr. Wilson, wero re-elected. Messrs. J. A. Duncan and N. A. Duthie were reappointed auditors. Votes of thanks were passed to tho directors and staff.