COLONIAL INSURANCE COMPANY OF N.Z.

New Zealand Times, Volume LI, Issue 8990, 15 May 1890, Page 3

COLONIAL INSURANCE COMPANY OF N.Z.

, Tha twelfth annual meeting of .shareholders in this Company was held yesterday afternoon. Mr J. I>. Harcourt (chairman) presided, and there was a fairly large attendance, annual report and The Chairman, in moving the adoption of the report and balance sheet, said ; The balance-sheet and report which I now purpose moving the adoption of have, I believe, generally met with the approval of shareholders, and I have now an agreeable duty to perform after the past few years of our contention against adverse circumstances. It is, I think, five years since the Directors were able to meet you with a substantial balance to the credit of the Company as the result of the year’s trading. In November of last year the Directors issued a circular to all the shareholders informing them that the business of the Company continued to improve, and that they hoped to be in a position at this meeting to declare a dividend, and, gentlemen, we have met here to-day to discuss the nature of our improved position and to carry out theexpectations of November. You have no doubt carefully studied the document that has been placed in your hands, arid will have noticed the very satisfactory changes in the figures now presented to you as compared with previous years. The first items that will c.all for kny remark from me are in the profit and loss account, and here you will observe that, while our business is not increasing in volume by leaps and bounds, yet there has been a substantial addition in the amount of the fire and marine premiums, those for the past year being L 67,413 19s lid, against L 64,421125, or an improvement of about L3OOO ; and this improvement is shared by both the fire and marine branches, and Has been fairly distributed through all the branches and agencies of the Company, for out of 18 agencies 15 show an increase of business. It would have been an easy matter to increase the premiums, but the object has been to secure good business, well distributed, and not so much a large premium income. Every risk has been carefully considered before acceptance, and if in any way unsatisfactory, has been rejected. Under the heading of “ interest and rents ” there is an improvement of L 583 15s 9d, or nearly 30 per cent upon the income derived from this source last year. This, as you will see, is very considerably duo to our having a larger sum invested, and you will remember that I mentioned when I last had the pleasure of meeting you, that sundry repairs to various properties had been made, and such expenses had been deducted frsm the rent account and not charged against the property. The present year we trust wilt show a similar increase in the revenue from this source. On the debit side of the profit and loss account, which we are now considering, is the item “fire and marine losjjla,” L 23,377 Os 7d, against L 26,863 12s 4d for 1889 ; any reduction in the sums actually paid for losses does not so well illustrate the improve meiit in the Company’s business as the percentage that these losses bear to the premium income. In 1886 the losses were 91.5 per cent of the total premiums received ; in 1887 they were 77 per cent; in 1888, 65‘5 per cent, 1889 03 per cent, and this year they are only 54 - 9 per cpnt, the fire losses being 55'5 per cent, and themarine 54 per cent; so you will observe that each .branch of the business shows up equally well, and gives ’evidence of the attention paid to details. For the last eight years, with two exception*?, no colonial company has recorded less than 60 per cent of losses, and the exceptions referred to were 58'9 per cent arid 59‘2 per cent, both by the same Company. For 1888, this being the last year for which information is published, eight of the largest English Companies showed an average of 58‘3 per cent of losses. The total number of our losses by fire for last year was 116 against 154 for 1889, and of these 93 were for L2OO and under, and so well have the risks been distributed that only one loss reaching LIOOO was made during the year. In marine our losses were 52, and of this number 43 were for LIOO and under, and only one loss was made in excess of LIOOO. The item reinsurances, discounts, and return premiums is in excess of the amount'paid under this heading last year by L3lll 6s lid, and of course you will understand that this excess is due to the care exercised in reinsuring risks and retaining only small amounts of business. It is quite possible the Company may have been over-cautious in underwriting, but from past experience it is better that an error, if any, should bo made in that direction than in the opposite. Agents’ commissions, &c., are a little in excess of last year, and is due to the extra commission paid to agents, &c., on the larger business done by them, and on their profits made. The expenses of management are as low as they should be for the Company to have efficient officers, and officers who are not efficient are dear at any price. The percentage under this heading comes within what experience has proved to be that under which good and reliable officers cannot generally be secured ; and, as stated last year, we are under the average expenses of insurance offices. It is sometimes remarked that insurance companies .appear to be carried on simply .to pay a large and;expensive staff,: and. fault is found at the salaries, paid, but such remarks are generally made by those without any knowledge of insurance business, and they do not understand that the profits of an insurance business lie in reducing losses and not so much in diminishing expenses. Too great parsimony in the matter of expenses often means less inspection, less prudence, and the “losing of the ship for a pen’orth of tar.” Under the heading “ contributions, &c.,” a saving of L 172 Is Id has been made. Government licenses and taxts are a very heavy charge indeed, and in unprofitable years bears most seriously on the InsjKeoree Companies, as the tax is levied upon the gross premiums received, and not upon the net amount of profit. The last item in the account which, no doubt, has been noticed by you all, is that of “ balance, LBll3 Os 9d.” This is not a chance result of an exceptionally lucky year, but is the result of careful and cautious management extending over the past five years, and during that time, no matter How tempting the business offering may have appeared, it has not been accepted unless on sound insurance principles. That it is as stated will be seen from the following figures In 1886, when the last of our reserve fund disappeared, we ended that year with a loss of L11,6930n underwriting ; 1887 showed a loss of L 3285. The year 1888 closed with a credit balance cf L 3547 ; 1889, with L 4393, and this year we meet you with a credit balance t>f LBll3, of which

L 5132 has been made in underwriting, and this is the largest year’s result, with one exception, thar has been made since the Company was established. This profit is not the result of one or two successful branches, but is well distributed over,the Company’s field of operations, for out of eighteen, agencies fourteen show a profit. So that you will notice that the improvement in the position of the Company under Mr Allen’s management has been uninterrupted from the first, and there is every reason for believing that next year wc shall meet you with a balance as much better than that shown this year as this is better than last year. Appearances are, so far, certainly in our favour, for up to the Bth inst. the premiums received are L 1175 in excess of premiums received up to same date last year, and the losses are L 1897 under those of last year, an improvement of L 3072 for five weeks. In the balancesheet the investments show an increase during the year of L 5456, and never have the in\ estments of the Company been of a sounder nature. The deposits are also increased by L7OOO ; these two combined more than exceed the total of the year’s profit, but the amounts owing at head office, branches, and agencies have been reduced by L 4500, .' Inch you will admit is a very satisfactory state of affairs. Office premises and other properties are s’ightly increased ow’ng to some properties having been, sold and others taken over. The other three items on this side of the balance-sheet' are almost the same as last year. Appropriation for unpaid losses covers all liab lity for outstanding accounts, and is a ittle in excess of la-.t year. Sundry Creditors—This is about the same as last year, and includes a sinking fund, being a provision for the leasehold properties of the Company. Profit and Loss, LBll3.—lt is proposed that of this amount LSOOO be appropriated to a payment of a divi ’end of 10 per cent. Seeing that the shareholders have been so long without receiving any interest upon their investment, the Directors feel justified in paying this, and from the information supplied to you to-day, I trust their recommendation will meet with your approval, and, as the Company will continue to carry on the business on the same lines as for the last few years, I hope that a similar dividend can be paid'you next year, and also that a large amount can be carried to a reserve fund, which will now be the main object of your Directors to establish. On the present occasion per cent of the profits for the year are carried forward toward a reserve, and next year we may hope to add very largely to it. The prospects of the coming, year are encouraging. At present there is no tariff in Dunedin, but rates there have been very much improved, and every month the prospects of an agreement amongst the companies appear to be improving. In Otago, Southland, and Oamaru a tariff has now been almost arranged, and the recent exertions of the Insurance Companies have brought about a much better prospect of a tariff in Dunedin. There is no doubt that the improvement of the affairs of the Company may, to a great extent, be attributed to the better condition of the Colony, and as the general indications are that that prosperity will continue, we may fairly expect that our success will also be of a permanent nature. I have great pleasure in informing you, with respect to the fire at Dunedin reported in this morning’s paper, that the Company is not interested in it. For a short time this Company held a large risk upon that property, but on inspection it was deemed undesirable to ‘continue, and the business was sacrificed. .Therefore We have avoided ,a large loss. Although in the telegrams that have appeared in the papers we are reported as having made a loss of L2OO at Invercargill the other day, that is incorrect; we only lost LBO. Mr B. W. Mills, in seconding the morion, said it gave the Directors very great pleasure to bring such a satisfactory report before the shareholders. Mr Wheeler expressed satisfaction with the report, and said he was certain, after hearing the Chairman’s speech, that the Directors had not been too liberal to the shareholders. The Chairman, in reply to Mr C. T. Richardson, said the item, “ bills receivable, L 489 16s Id,” was for marine premiums. The motion was carried unanimously. ELECTIONS. Messrs J. B. Harcourt and Jacob Joseph were re-elected Directors unopposed. Messrs D. T. Stuart and C. A. Deacon were re-elected auditors, at the same remuneration as before. VOTE OF THANKS. On the motion of Mr C. T. Richardson, a hearty vote of thanks was passed to the General Manager, Mr F. Allen, and his staff for their services. This concluded the meeting.