THE NATIONAL INSURANCE COMPANY.

Otago Daily Times, Issue 7568, 20 May 1886, Page 3

THE NATIONAL INSURANCE COMPANY.

: TO THE EDITOR, Sir, —Referring to circular issued by the Directors of the National Insurance Company, that no interim dividend will be paid for the half-year ended 31st March, and this being the second half-year that this Company have paid no dividend, one is led to examine their published statements, and thereupon to ask why should not a proportion of the dividends earned be distributed among shareholders.

■ First, it. will not here be out of place to remember that only a few years since there was a second issue of shares, at a premium of 15s per share, amount received added to the reserve fund, upon the representations of the directors at that time, that this premium, inter alia, would, if required, be applied to the equalisation of future dividends. Instead of carrying out this very legitimate arrangement, let us see how are the interests of the general body of the shareholders in this direction being attended to. ■'■■ The subscribed capital- is published at £1,961,000, of this there has been paid £98,077, leaving a balance not called of £1,862,923, or a very ample provision against possible disastrous losses, should such befall the company, besides the unlimited liability of shareholders in addition. Taking the paid-up capital, £98,077, and adding reserve fund with undivided profits, £193,314, these together amount to £291,391.

Presumably, these funds are invested at a higher rate; but, for illustration, were they deposited at interest with one or more banks at five per cent, per annum; they would yield dividend £14,569 11s for the year, or a sum exceeding 14J per cent, upon £98,077, the capital paid up, and upon which shareholders are entitled to receive dividend.

If the circumstances of the company are really such that in this period of depression they cannot carry the additional ttraiu of paying a six months dividend at the rate of seven per cent, per annum, amounting to £3432, would it not be only prudenb at once to face the position and liquidate before risking losses that may infringe upon and diminish the company's capital funds ? On the other hand, if it be only a whim of one or more of the directors to withhold from shareholders their due proportion of profits earned during the past six, or really 12, months, would it not be profitable to examine somewhat more closely into the efficient management of those directors who are now entrusted by the shareholders with the control of so large capital and reserve funds, the property of our local insurance company ? To permit the existing management to continue will result in the more wealthy freezing out their fellow shareholders whose means are limited and

who will not always be able to hold on

against this wilful depreciation in the value of their shares through the non-payment of dividends—a condition in which they find themselves not altogether by their own fault, but apparently owing to misapplication of profits earned.—l am, &c,

Another Shareholder

Dunedin, 18th May,