NATIONAL FIRE INSURANCE COMPANY.

Otago Witness, Issue 2179, 28 November 1895, Page 63

NATIONAL FIRE INSURANCE COMPANY.

The twenty-second anmucf meeting of .tho National Fire and Marine Insurance Company of New Zealand was hold in the company's offices, Rattray street, on November 14. There were about 50 shareholders present, among them being the Hon. S. E. Shrimski, Archdeacon Fenton, Messrs C. Haynes, A. Bart, R. Wilson, H. North, A. Mowat, W. Wright, R. Glendining, A. D. Lubecki, T. Callender, J. Wright, T. Hoodie, W. Barron, R. Watson, T. W. Kempbhorne, K. Ramsay, and G. Richardson. ANNUAL REPOHT. The directors submit their report and balance sheet for the twenty-second year of the company's operations. The net premium for the year amounts to £82,935 Is lid. After paying an interim dividend of £7,352 10s 3d there is a surplus of £7,505 0s sd, to which has to be added balance from last year, £11,140 Os Srf— £2l,6s4 Is Id. They now recommend the payment of a further dividend of ninepence per share (making the total distribution for the year Is OJ per share), which will absorb £7",352 10s 3d, and to carry forward £14,301 4s 10d-£21,654 Is Id. The fullest provision has been made for all known and unadjusted losses in the item of £12,483 14s 9d. It will be -necessary to elect two directors. Messrs. J. 11. Bitchie and Keith Ramsay retire by rotation, and offer themselves for re-election. The retiring auditors are Messrs. Thomas Callender and A. G. Fenwick, who offer themselves for re-election. Mr J. M. Ritchie, chairman, in moving the adoption of the report and balance sheet, spoke as follows : There ia but little to say about the figures of the balance sheet themselves. The total premium income is, unfortunately, rather lesß than last year, 'and still more unfortunately tste -risks covered are considerably greater. For Jhis reason we have left the reserve required to reinsure current risks untouched. The losses are higher than last year, and yet we escaped to a groat extent the large fires which swept Eereral towns, so that we must consider ourselves favoured by luck for the year. Expenses are little different, but the Government taxes are £1300 lese, as the land tax was collected within the previous year; and, lastly, as affecting profit; and less account, interest and rents are reduced by about £1200. This has been caused by the loss of rents ft;om our Wellington and Dunedin freeholds and two items of iuterest not collected. As to the first, we have fitted up the Wellington premises at a' small cost, and shall henceforward get a fair return from them ; and we have also got a tenant at Dune din. As to the arrears ot interest we have sold ths greater patt of the larger property, and have every prospect of recovering part of the unpaid interest, and in the other case shall be able to ( make a fair interest until we sell. In the meantime there is the sa<isf fiction of knowing that all interest due at September 30 has been paid in the £9658. We must, however, I fear, lay our account with a considerable reduction in the return from our investments iv fufure owiug to the fall in interest. We can orily get 3£ pee cent, now from the bank,- and, though we Jtiavr balanced this to some extent by increasing loans on mortgages duriDg the year, we have had to accept s£, and even 5 per cent., for these in order to secure the very best class of mortgages, j You will see that we have again written off a •! sum fiom investments. This £2122 arises from an "actual loss made in the sals of one security for cash — an estimated deficiency made up by the best valuer we could get on another, the owner of which has failed to pay his interest ; and a small amount written off in town. As many of you are no doubt aware, the last six months have been probably the most trying to the soundness of all kinds of country securities which have ever been experienced in the colony, and have brought many borrowers to grief. I hope the worst is over now, and that we may fairly look for m&terial improvement in the future. I Bee no reason to speak differently to-day about our investments generally from what I have done in past years. I believe they are above the average in soundness ; but, nevertheless, when a borrower makes default owing to the hardness of the times it is often not easy to sell, as many of you kuow, and if we make the choice to realise even at a low figure rather than hold on in the hope of belter times, which I belitve to be sound policy, it is not easy to avoid loss. Having thus referred to all the points in the balance sheet, I should like before silting down to say a word or two about the new fire tariff, which may fairly be called a vexed subject, aud which has probably strained the allegiance of all of us more or lass to our company. I do not kuow whether you will admit that in insurance business a tariff is a necessity, but I can assure you this is bo; and that if all companies fall into a condition of unlimited and "universal " cutting" it Cannot last, and is in the end disadvantageous to the insured as well as ruinous to the companies. We had fallen into this state of business in New Zealand ; much worse, it .is true, at some points than at others, but more' or lees io all over, with a tendency to get worse every day. And you may be sure that there must have been a pretty strong feeling that it was necessary to do something when the representatives of over 25 companies, who had been fighting bitterly and cutting rates at all points, agreed to meet at Melbourne last July to discuss the eituation. As a board, we had no hesitation in agreeing to join the conference, which Bat for four weeks, and finally produced the elaborate t ariff which has been a bugbear »nd irritation to so many of us. Now, I am persuaded that nothing was further from the miDds of any one of the representatives than to take advantage of such unanimity as existed to "slate" their clients in the matter of rates ; and that they tried honestly to frame these as far as possible on the basis of their universal experience over a series of years of results. And if you come to think of all the oppoaiDg interests which wererepresented I think you carinot but agree with me that any other idea is ue reasonable. Nor do I believe that there was any special weight of influence emanating from the English more than from the colonial offices, or vice versa. It gce3 without saying that in such s tariff there must be many anomalies, and even many stupidities ; and the tendency, doubtless, is to make the hazardous risks, or the higher rated risks, suffer most, be- . cause these are the risks which apparently can stand most " cutting " when there is no tariff. Then, also, in New Zealand rates were by no" means uniform in each provincial district, and there were many policyholdera who paid for the losses caused by others. This injuefcicfrhad to be rectified, But how was it possible to think of all the thouaand-and-one points at the time P And even if some of them were noticed, how was it possible to stop to argue out and settle every one ? The first objeot' was to arrive at a common ground, if possible ; and, in my opinion, a great point has been gained towards making insurance business more couud in future in having certain figures of rates set dpwn as relatively fair one towards the other in the opinion of ' all the" experts in the business ; and, whatever happens in the future, a large amount of very important data has been arrived at which must be of great value to all prudent managers. Now, as to the future, tho Anomalies and stupidities will not be lost sight pf. It was arranged that another conference is fN&tQ Wellington ia January or February to

consider and adjust, and in the meantime a large amount of time is being occupied almost every day by committees in interpreting the tariff and recording the numerous complaints and mistakes which are discovered in daily working for the purpose of discussion and correction. You will see that, having joined the tariff, it is quite impossible for any eioglc office to rectify errors by itself as they are discovered. They must be loyal, and all must act together. So that I think it is but reasonable to ask our clients to exercise patience. Nothing is beiug done which has not long ago been forced upon all insurance companies in England, and been carried out by them after much time and trouble. Probably many may object altogether to tariff a and prefer constant free fighting. My experience in all departments of business has been that this, in the end, doe 3no one any good, but the reverse ; and as for having insurance or any other kind of business carried on by the nation or municipality, does any oue of you think thnt this is a patent plan for efficient and economical working ? If it ever seems to be so depend upon it it is only because part of the cost has slipped somehow on to the taxe3 or rates. You may be sure that in the long run, and before very long, competition will always give you all j the reasonable and sound advantages which you require. And, besides, are we not to seek to build up in this colony separate and independent commercial and industrial enterprises for the inv^s.tment of our savinga fuch as have made older countries what they are ? I have taken some pains to satisfy myself of what seems a fair view to take of this tariff question, aud am probably about as much interested on both sides as the average of you. I hope my remarks nisy tend to induce at least shareholders of local companies to exercise a little patience, and to give their officials credit for not being absolutely foolish iv the way they are trying to manage the affairs of their pr< perties. I shall be very gkd to a&swor any questions, and now beg to move the adoption of the report and balance sheet. Mr K. Ramsay seconded the adoption of the report and balance sheet. Mr A. North wished to know if ib was possible for insurers to insure their risks up to the time -that the committee would meet, say, in January or February next, when the removal of anomalies in the tariff was to be dealt with, or must policies be taken for 12 mouths under the existing tariff. The Chairman said there were some 25 companies concerned in the tariff, and they niuafc either sticV together or go their own roads. They could not do anything bub adhero to the tariff. Of 'conrte all these matters of coniplaiut would be taken into account, aud no doubt reasonable action would be taken ; but if the companies intended to act together they must act loyally. Mr North wished to know whether, in the event of the rates being reduced, there would be'sny refund to the insurers. The Chairman replied that it was impossible for him to say. He should hope so. But he was bound to say that from the information on hand, based on actual results with reference to certain rißks, the most of the increases were jus>tifi"d in every way. Ttiat was not the trouble. The anomalies he had referred to came about, for instance, when a large risk was upsat by a hazardous element .being brought inEo it. The increase did seem a little hard in some Cases of that scrb. The Hon. Mr Shrimski said that however anxious they might be to get as much in dividends on their investments as possible, still he thought the agreement into which they had entered with various associations was extraordinary and arbitrary. It had iucreased the premium rates to an enom-.ou<? extent. Speaking as a public man, he knew that great influence had been brought to bear on the Legislature to pass laws that would enable either the General Government or the local bodies to undertake the insurance of property. This being so, if they discouraged their clients by making arbitrary exactions aud causing them lo pay higher premiums than they should pay, sooner or later one and all would turn against them. Iv any case for a time they were likely to lose a number of their clients, and if the Legislature was forced to pass either general or local insurance they would permanently lose a great many of them. Although he wanted as good a return on hig investment as possible he preferred a fair tariff, one with which the people would not? be dissatisfied. He was not speaking personally when he said that Oamaru was the best fire insurance town in the colony. It had a magnificent water supply, and all the buildings were of stone, and yet it was classed as a secondrate town in the matter of premiums, higher rates being charged there than in Duuediu. The Chairman said that was because there was no fire brigade there. The Hon. Mr Shrimski said there was a brigade there. The Chaiujian said it had not a properly organised brigade in the way Dunedin had. The Hon. Mr Shrimski said such a brigade wa* not wanted — there were no fires. The Chairman paid if any wrong had been committed it would probably be pub right, but a properly organised fire brigade must seem to those acquainted with insurance matters essential to a town beiug put in the first-class. Mr .A. Mowat did not think the chairman had quite comprehended the question concerning the anomalies that existed in the rates. The Chairman stid in the mtantime they had got; the tariff, and it remained to be seen what reductions were to be majle by those who would meet in Wellington iv January. If all the companies agreed to m<vke reductions retrospfc'ive, money paid would be returned. Mr Barron thought the shareholders disapproved altogether of the action taken by the several insurance offices in raising the tariff. The company had been established for a great many years, and it should not under any circumstances have been dragged into a combination of this kind, which did not enrich the shareholders, but had a tendency to enrich outside offices. They must consider that the ! action would have a very bad effect upon public feeling in the colony, and they could not shut their eyes to the fact that there was a great feeling throughout the colony that the State should do many things that had been left to private enterprise. They knew there was a feeling in the direction of getting the Government to establish Government insurance companies, and the tendency of a combination such as this on the part of insurance offices would be to strengthen the hands of tho3e who wanted to bring about a policy of this kind. Next session they would find that they had strengthened the hands of those who were too weak to-day to do anything of this kind. All things considered, he thought the sooner the directors withdrew from this combination the better it would be for their own business, and they would stand higher in the estimation of the shareholders. Mr Watson thought they could not be blind, to the. effect this high tariff would have throughout New Zealand. What he would like to see was a fair risk fora fair price. Mr Haynes hoped the representatives of the company would take into consideration the remarks made by Mr Barron and Mr Shrimski re the tariff, and remove what was in the minds of the community. Tbere was no doubt there

was a strong feeling that insurance companies had now gone to the very extreme, and he hoped these anomalies would be considered.

Mr Harrop said the premiums now charged were higher than they ever had been'in Dunedin during the lasb 15 or 20 years. They were all prepared to admit that; the premiums had been too low for a considerable time, and he was very glad when he heard that a tariff was likely to be framed, but he had not the slightest idea that it would be as it was now. At one time the premium on a dwelling house was 63 or 7s ; now it was 17a. It seemed to him that after they had gone to such extremes that it would bs a case of the people of New Zealand acting in a body to indues the Government to take the matter in hand, or induce other companies to come here. He had for an ordinary dwelling houee paid a rate of 17s and 17s 6d, which was monstrous. He was one of those who thought that if they had taken the old rate aud the rate bow fixed and divided them by two they would have arrived at a very fair rate of insurance. The Chairman said that the general tenor of the remarks made conveyed nothing new to the directors, and the suggestion that there had been any attempt to overdo things wonld not hold water." It was very difficult indeed to avoid such troubles as were complained of, or J to avoid at fh'dt the anomalies. Anyone who looked at tho matter from the point of view of an insurance company would admit that a tariff was a necessity, because they had to sell an indefinite commodity. If they knew the absolute volcnno that this and other companies had been silting on in the matter of fire insurance they would give the directors come credit •for seeking to arrive at a fair state of things in their interests. However, all that had been said would be tnken into account, and matters would be so adjusted, he hopsd, as to satisfy a fair number of shareholders. He hoped shareholders would give them credit for some littlo common eeuse. The., matter was nob one that had come upon them •suddenly, but elaborate statistics of the experience of all kinds of risks had been in the office for long, and ehareholdera could have little idea of the trouble and anxiety which the matter b.Rd given to Mr Williams. The motion for the adoption of the report and balance sheet was carried unanimously. Messrs J. M. Ritchie and K. Ramsay were re-elected directors and Messrs T. C.-tllender and A. G. Ftnwick auditors. The Chairman said he had a resolution to move — namely, " That the number of directors bo reduced to eight." The number had hitherto beeu nine, but the meeting had the power to reduce to any number it pleased. They had lost the services, of Mr Edmund Smith, who had beeu an excellent, paint>Uking director. The board had missed him, and he (Mr Ritchie) regretted that death should have taken him away. Tho number of directors having been eight, it had been found that that number was amply sufficient to carry en the business of the company. I move — " That the number of directors be reduced to eight." Mr Watson : Will their remuneration be proportionately less ? The Chairman : Certainly. Mr Sukijiski seconded the motion, which was carried, and a vote of thanks to the directors and staff, proposed by Mr Watson, closed the meeting.