INSURANCE SHARES.

Otago Daily Times, Issue 6089, 16 August 1881, Page 3

INSURANCE SHARES.

| TO TUB EDITOR. Sir,—Very much lias boon written lately about one of our local insurance companies, and the tone of some of the letters savours very much oi cither ignorance of the subject, or an attempt to undervalue the stock of one of the most successful undertakings ever floated in this Colony, and, morooyer, a local institution. Wo have tsvo local insurance . companies—the National and the Standard—and it can very readily be seen how these companies Btand at tho present timo, and the value of the shares estimated at a glance. The National paid-up capital is .. .. .. £ 50,000, or 10s per shai-o Reserve fund .. .. 100,000, or 20s „ And estimating tho amount available for reserve for the year nearly ended at the samo as former periods 15,000, or 3s ~ And the half-yearly dividend nearly due .. .. 5,000, or la „

Total .. .. 34s per share (this without including the amount of balance generally carried forward), and if the goodwill be reckoned at £20,000, this would be equivalent to 4s per share more.

But, stripped of any balance or goodwill, the figures show at present 345. Or tnke the interest-bearing aspect of tho stock, it will show as follows :—

Tho reserve fund, now standing at £100,000, has reached the point always aimed at by the directors before dapiaring larger dividends, and therefore, if the Company has done equal this year to what it has done previously (which thoro is no reason to doubt), and reckoning tho net profit for tho year at £20,000, would give 40 per cent, on the paid-up capital, over 30 por cent, upon the paid-up capital and reserve, or over IXJ per cent, if 35s were now paid for the shares ! 1 think, under these circumstances, the.-c are plenty of capitalists in Europe and Australia who would not !ut! such stock go much under 40s.

Of course, in insurance husjno39 it & ao.fi wlso to distribute 5,11 tho earnings; and, after a good " respivp" the wise course is'to' capitalise, thua strengthen)n.K the funds of the company on the one hand, and gradually inpreasinp tho dividends on the other. But even then It is prudent to continue adding to the " reserve" year by year, to provide for unforeseen occurrences.

Our other local company (the Standard) h.-i3 come through a different ordeal to tho National, but at the last half-yearly balance the capital account stood at 4575,000, or 15s per share, and tho reserve fund (after wiping off £7500) stood at £12,600, or 2s Gd per sharo ; making a total of 17s Cd per sharo. And this ,stocl; U now quoted at 16s. There is lifo in this Company yet, and under tho new management, and with the experience of the past to guide the directors, 1 expect soon to see thii Company also tako a good place among our Colonial offices. And surely, if our neighbours are so jealous in guarding and fostering their local undertakings, Dunedin should not be the first to try and trample on hers.—l am, &c, PllffiSlX. Dunedin, August 15th.

For remainder of news see paye 4.

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