COMPANY BALANCE SHEETS.

Otago Daily Times, Issue 19615, 20 October 1925, Page 8

COMPANY BALANCE SHEETS.

THE SOUTH BRITISH INSURANCE COMPANY (LTD.).

Paid-up Total Dividend uiiiHtiu. reserves. Profit. p-i s'iu r c. Aug. 31. £ £■ £ e ‘ 1918 ... 600,000 403,342 134,2-5 5 0 1912 ... 500,000 470,976 143,548 5 0 1920 ... 500,000 572,593 172,043 7 0 1921 ... 750,000 488,072 159,539 *1 7 jnoo 750,000 544,098 160,769 1 8 1923 ... 773,730 664.531 175,581 1 9 1924 ... 773,730 751,310 184,883 1 11 1925 . 773,730 840,445 196,918 2 1

* Shares subdivided from .-£5 to £1 each, and paid up to the extent of three-fourths of the nominal value instead of one-half. , The result chronicled lor the past year s working may bo regarded ns highly satisfactory. The net profit has taken a move upward of £12,035, almost sufficient to add 3d per share to the dividend, and has reached £196,913. This is equivalent to a return of 25.45 per cent, on the paid-up capital, and brings the rate closer to that prevailing at the time immediately preceding the distribution of reserves in 1921. Shareholders should be gratified at receiving in dividend a further 2d per share from the increase, bringing their total participation to 13 8-9th per cent—over half of the net profit. Reserve fund receives £75,000, the same addition as 12 months ago, and the floating balance is augumented by approximately £14.000. The premium income has risen some £26,009, an advance that has not been accompanied by a proportional loss. The losses from all departments are up by about £7OOO or not much over a fourth of the premium increase, whereas the average proportion of losses to premium income in recent years has exceeded one-half. If this company dealt in life assurance, it might be said that the early period of now business is not likely to experience the full risk, but in the case of fire, marine and accident business, this feature is scarcely likely to apply. Comparing the losses with the premium income since 1917, the relation stands thus:

Premium Dosses. income. Ratio. Tsar. £ £ P-o. 1917- ... 329,466 656,989 50.15 1918- ... 328,738 645,953 50.89 1919- ... 369,194 792,664 46.58 1920- ... 499,300 924,159 54.03 1921- ... 538,289 893,340 60.25 1922- ... 491,940 866,388 56.78 1923- ... 489,668 879,799 55.66 1021-25 ... 496,709 905,017 54.83 The latest ratio recorded above is the lowest for four years. The larger premium income is due doubtless in some measure to the alteration in the premium rebate rate from 15 per cent, to 10 per cent—a change of which 1924- would receive the full benefit. The other source of revenue —interest and rents—is also higher, £111,091 as against £103,113. This represents an average return of 5i per cent, per annum from the invested funds, a s detailed in the balance sheet, some of which, however, will not have been producing revenue for the full . period. The steadiness in the increase hero is evidence of the strong position attained. The unearned income has surpassed the balance of earned income some time ago, and each year tends to widen the, difference. Expenses have followed the general trend and mounted to £313,382, some £SOOO higher for the 12 months. No details are given regarding the respective figures for the different items, but below it will be seen that the ratio of the aggregate has diminished when placed opposite the revenue—viz.— Expenditure. llovenue. Katie. Tear, £ £ p.c. 1917- ... 215,176 708,017 30.35 1918- ... 223,090 705,376 33.62 1919- ... 286,643 883,779 27.70 1920- ... 283,613 1,003,462 28.12 1921- ... 279,638 978,696 28.57 1922- ... 294,178 961,699 30.59 1923- ... 308,362 982,912 31.27 1924- ... 313,382 1,017,009 30.81 The average works out at 29.fid per cent., and although the annual total is more often above than below this mark, it compares favourably with the relative position of six and seven years ago in spite of the decidedly increased charges in the interval. With the investment fluctuation fund, and the floating balance added the aggregate of the reserves is equal to 10Q.62 per cent, of the paid-up capital. Reserve fund alone now stands at £600,000, and the time seems almost ripe for a further distribution to shareholders in the shape of a bonus share issue. As the number of these issues increases, so of necessity must the reserves to meet them be larger on each occasion, and the interval of time between the payments must tend to bo longer. The reserve for unespired risks has been swollen by £IO,OOO, a step justified by the growing turnover, pie reserve foe losses outstanding is £159,839, less than one-third of the total losses for the year, and a proportion that compares favourably with the years immediately preceding. The general liabilities to outsiders are comprised under bills payable and sundry open accounts (£203,792). This item has greatly increased during the past two years, without anything apparent on the other side of tho balance sheet to account for the rise. It may bo that some further reserve is ineluded here. Investments form the bulk of the assets. There are partly placed in landed property, but mainly in Government and public body securities. The sum of £354,163 representing landed property is probably chiefly, if not entirely, found in the company’s business premises, part of which is let to tenants, but possibly the rent account is mostly fed by the allowance made for the portion of the promises occupied by the company itself. Government securities amount to £1,288,445, larger by nearly £60,000 thap 12 months earlier for, while war loans have diminished over £120,000 and the General Government stocks have increased. American Government securities are £3OOO down, and the assumption is that these refer to the United States. Loans on mortgage arc increasing. The grand total of the invested funds is £2,114,031, against which the investment fluctuation account holds £85,110.

There are some further investments included with cash in banka. These are of short date and denosits, readily available in case of need. The largo sum of £181,143, enough to cover the reserve for looses outstanding and something more, is maintained in this form to meet contingencies of an unexpectedly large nature which may arise, and which in the case of an insurance company doing fire and marine business in various parts of the world, have to bo rigidly provided ior.