INSURANCE YEAR

New Zealand Herald, Volume LXXVI, Issue 23488, 27 October 1939, Page 5

INSURANCE YEAR

THE SOUTH BRITISH ACTIVITY IN ALL FIELDS f DIVIDEND INCREASE DEFERRED r CLEARER OUTLOOK AWAITED The success of the past year's operations of the South British Insurance Company, Limited, was emphasised by the chairman of directors, Mr. W. R. Wilson, when addressing shareholders at the annual meeting in Auckland yesterday. In moving the adoption of the accounts, details of which were published in the Herald 011 October 10, Mr. Wilson said business had been very active in nil fields, and the new branches established during the past year or two were now providing a useful and profitable addition to the premium income. A few months ago the company opened its own office at Alexandria, Egypt, where it had had associations through agents for the past 'lO years. Side by side with these developments there had been a tale of steady progress at the older established branches throughout the world. In South Africa, particularly, there had of late years been a striking growth in the company's business, the income having more than doubled in the last five years. Jll spite of the unsettled conditions in China and Japan, branches in those countries had continued to do an active business, with very satisfactory results.

To tlio year's further advance of £75,000 in the total premiums, the lire, marine and accident sections had each contributed a share. Losses paid and outstanding amounted to £844,516, and, although this was £5119 in excess of the figure in the previous account, it represented a smaller percentage of tho increased premium income, 59.5 per cent, as against 62.8 per cent.

Australian Bush Fires The net amount paid for the disastrous bush iiros in Australia in January and February was £21,000. The year otherwise had been n comparatively tranquil one for the company as far a»s losses were concerned. In New Zealand during recent mon,ths tho destruction of timber mills had become almost epidemic. Some of these lires had involved heavy loss to the owners and to insurance companies, but, by good fortune, not to their company. "Marine business as a whole returned a satisfactory profit," continued Mr. Wilson. "Losses in the accident section have not eased oil to any appreciable extent. Both workmen's compensation and motor-car policies are prolific of claims. "There lias been a sharp rise of over £68,000 in the general expenses, the amount this year taking 27.15 per cent of the premiums, compared with 23.56 per cent in the previous year. Some of this heavy increase is duo to salaries and to fire brigade and similar assessments based on income, but over threefourths arises from taxation. In bygone days taxation was allowed to fall against the year in which it was actually paid. This was altered several years ago, and the amount of tho assessment due to bo paid was included in the year to which it applied.

Extra Taxation Provision "There was still, however, a lag in the New Zealand taxation, our return for which is made up annually to March 31, and the opportunity has now been taken to correct this by including provision for the remaining five months of the company's financial year. Over and above this there have recently been increases in the rate of tax in both New Zealand and Australia, and these were also provided for before closing the books. "By the addition of £60,000, the reserve for unexpired risks has been brought up to £780,000, or oo per cent of the year's premiums. Our operations have thus resulted in a surplus of £128,120. This the highest return we have yet been able to show, but is no more than you have a right to expect upon the steadily increasing business under favourable conditions. After referring to the fact that £IOO,OOO had been transferred to the investment fluctuation account and £50,000 to contingencies, Mr. Wilson went on to explain that all the company's investments had been written down to current prices and oven a little further in the case ol high interestbearing stocks of fixed maturity, in keeping with the heavy fall in market values.

Influence of the War "After such a satisfactory year, there may bo a slight feeling of disappointment that we have not thought fit to recommend an increase in tho dividend," stated Mr. Wilson. "We frankly admit that the company has had a good year, but one swallow does not make a summer, especially in a business subject to such ups and downs as insurance. After dealing with the uncertainty of the outlook as a result ol the outbreak of war, tho chairman added that the directors had sometimes been criticised for building up such substantial reserves. It was in times like these that their value was seen. "An appreciable portion of the company's assets is locked up in deposits with the Governments of various countries throughout the world, sometimes in cash, but usually in the shape of government securities. We have deposits of this kind with 15 separate governments, varying in amount from £'sooo to over £IOO,OOO, and these will not be released until all liability under policies issued to their subjects has finally expired. Reference to Dividend "We can sympathise with the feeling that there is little point in extending activities and increasing profits if the present shareholders arc not to receive some share in those increased profits. It is admitted that something extra could have been distributed this year, but, taking into account the present troubled conditions, the directors deem it advisable to adhere to the same distribution as last year. I trust therefore, that you will agree with our recommendation that resources should be conserved until the sky is clearer." Mr. Wilson concluded with a tribute to tho company's staff in all fields, while lie mentioned particularly the efficiency that was being maintained in London, in spite of many difficulties. "Willi those figures before us," ho said, "wo should not; have hesitated in normal circumstances to ask approval of a more tangible recognition of tho fine services rendered, but wo have come to the conclusion, most reluctantly, that this, like an increase in the dividend, is something that must perforce stand over." A number of the company's employees had already been accepted for war service and the chairman mentioned that any of their employees offering their services to the authorities were assured of a position with the company upon their return to civil life. He felt sure shareholders would approve of the decision to make up any .shortage between the amount of military pay and the salary employees would have received in their normal occupation. 'I lie retiring directors, Mr. K. I!. N. Russell find Mr. W. K. Wilson, were re-elected. At a subsequent meeting of the directors Mr. V. J. Larncr was appointed chairman for tho ensuing year.