INSURANCE COMPANY'S PROFITS.

Otago Daily Times, Issue 18724, 30 November 1922, Page 11

INSURANCE COMPANY'S PROFITS.

TO THE EDITOB. Silt,—An advertisement in a recent issue of your paper contains an unauthorised rcfcrenco to the South, British Company, Lest anyone should by such reference bo misled into thinking that tho business of insurance ia a gold mine from wliich great profits may bo obtained by those who get in early, i wish to draw attention to tno following remarks extracted front tho chairman’s speech at this company's annual meeting last mouth; — ~ During the first 18 years of the company's existence tho underwriting result was a loss of .£61,059. In 1890 it was decided to write oh capital to the extent of £61,028. This was ■ subsequently restored, but the underwriting surplus over tho first 33 years was not more than 4.V0 per cent. Tho balance at credit of underwriting account lor the half century was 7.95 per cent. The explanation of capitalisation from reserve funds is, therefore, not large underwriting profits. The explanation Hi the pursuit of a definite policy not to distribute any portion df underwriting surplus, but to accumulate it for the greater protection policy-holders. It is solely owing to tho directors having regarded their position as in tho nature of a trusteeship of funds to be available lor meeting any loss that may occur that tho ' moderate annual surpluses have furnished the great security the company now affords. If the underwriting surplus had annually been distributed by way of dividend it would have attracted no attention. Neither would the company be in any better position ictday to fulfil its mission than it was 50 yoais ago. Indeed, it would probably have long since gone ir.to liquidation owing to insufficient resources to meet exceptional losses which periodically occur. The great Melbourne lire may- bo quoted as an illustration. That loss ■ amounted nearly to’the whole of the paid-up capital of all tho Australian and New Zealand insurance companies then doing business in Melbourne. It may bo added that to pay commissions for placing shares of insurance companies and to issue paid-up shares to promoters are novelties wholly foreign from the principles referred to above. An the accounts of no successful insurance company that I am aware of has capital credited as paid rip not been represented by cash or its equivalent, nor have “commissions p ,a * { i * n respect ol shares’' masqueraded as an asset.—l am, etc., P. H- Upton, General Manager, South British Insurance Company (Ltd.). Auckland, November 23.

PORT CHALMERS UNDER NO-LICENSE. TO THE EDITOB. Sip.,—A recent issue contains a local relative to the conditions which obtained during the short time Port Chalmers was under No-license. The local embodied a statement purporting to have been made by a * man in Port Chalmers. Will you permit me to give an unqualified denial to the .statement, whieh is manifestly -untrue, reflecting upon respectable business people, and charging the police with complicity with law-breakers. Much is made of the prevalence of illicit liquor trading during the No-license time. Perhaps there was a. certain amount of illicit trading, but that is the condition also under license. To say that liquor was openly sold in tho main or" any other street in Hie town during the No-liconso period is a gross fabrication. It was plainly the- duty of_ this man. as a respectable, law-abiding citizen, cognisant of the facts and evidently in possession of such information as justified his making the much more serious allegation concerning police csmiivance, io lake such steps as would end such a 'flagrant contempt of the law. —I am, etc., T. J. Thomson. St. Leonards,