STANDARD INSURANCE COMPANY.

Otago Witness, Issue 3522, 13 September 1921, Page 6

STANDARD INSURANCE COMPANY.

ANNUAL MEETING

The annual meeting of shareholders of the Standard Fire and Marine Insurance Compmy of New Zealand was held at the company's offices, High street, on the sth. Mr \> ■ F. Edmond (chairman of directors) presided over a good attendance of shareholders. In referring to the business of the past year Mr Edmond said: It has been my privilege to address you on similar occasions in previous years, and to submit, accounts which I think gave you satisfaction. This year I am pleased to be able to report that your company continues to make steady progress, and we may well claim a record in business for the period, while we have materially strengthened the unquestionably strong position it lias held in the past. Although it has been an anxious time for underwriters as well as all business men, the year on the whole proved uneventful. Fires have been more frequent than were experienced during the previous year ; but we have been fortunate in escaping anything in the nature of a conflagration, with the result that our loss ratio is unusually light, amounting to only 41 per cent, of the premium income. W hile on thi- subject it is perhaps appropriate that I should refer to an aspect of underwriting which is giving insurance companies seme little concern throughout tho world. I refer to insurance against loss as the result of pilferage of overseas cargo! Although your company’s loss in this direction was materially minimised ns the result of extensive reinsurance, yet we did not. escape entirely. As the looses under this risk have materially increased during the last few years all the world over (last year's losses alone for Australian and New Zealand have been computed at something in the vicinity of i/380,000), underwriters, with a view to

minimising the evil, have come to an agreement whereby a merchant can recover only 75 per cent, of such loss. It is hoped that this will induce consigners to take steps to discover where the thefts occur. From this announcement it will be seen that the underwriters have made consignees party to the responsibility. Hitherto consignees have merely deplored the pilfering and presented their claims, saying: “Our stuff is broken into and stolen; we don’t know how, and it isn’t our business to find out.” For the sake of the 25 per cent, they are likely now to interest themselves and do something in the way of setting a watch. The financial tension during the year materially affected trade and commerce generally, but notwithstanding this handicap we are able to show a substantial increase in our net premium income amounting to £23,571. Our expense ratio is moderate —i.e., when you take into consideration the proportion paid in taxation —being 45 per cent., as against 42 per cent, per year. In these days of keen competition new business is not underwritten without the expenditure of considerable energy and heavy charges; therefore we must consider the result highly satisfactory. Interest on investments totals £l4-384 after deducting n percentage for taxation—an increase of £1763. I now call your attention to the figures under the heading of “ assets.” There you will find that loans on mortgage are at a vanishing point. In 1914 they stood at £116,000, equal to 48 per cent, of our total assets. To-day they appear at £47,420, equal to 12 per cent, of the total assets. As the company’s taxable income is now taxed at the rate of 8s 9d in the £, we. would require to seek at least 8g per cent, interest on mortgage investments in order to secure a return equivalent to that derived from the New Zealand Government 4i per cent, wav bonds at their present market value. In these circumstances, therefore, it would seem obvious that unless some relief is obtained from the ruling abnormal scale of taxation, we shall be pre-

eluded for the present from seeking this class of investment, and in consequence there will be closed an avenue of supply through which, since the inception of your company, financial assistance has been available for the development of the country. Fixed deposits, accrued interest, cash in bank at the head office and branches total £39.245, the other items being approximately identical. Under liabilities we find the reserve fund remains at £133.500. whilst £13,000 has been added to reserve for unexpired risks, bringing the total reserve under these headings up to £214,000 —i.e.. more than twice the amount of cur paid-up capital. In pursuance of our policy we have augmented the guarantee and provident fund by £2OOO. and feel sure shareholders will approve of our action in this respect. New Zealand and Australian war loans and Government and municipal debentures now total £242.334. I may state for your information that these figures represent “par” value; but in order to provide for the depreciation in this stock we have appropriated £23.424. In view of the abnormal position which has arisen the directors have considered it politic to make provision in the balance sheet for prospective taxation and this item, you will note has been liberally estimated. After making full provision for contingencies the sum available to deal with, including the balance of £6583 carried forward from last year, is £33.665, from which deduct, the interim dividend paid in March last (£7500), leaving a balance of £26,165, which the directors have dealt with in the following manner: —- To appropriation for depreciation of securities £IO,OOO To guarantee and provident fund... 2,000 and recommend that the balance be appropriated as follows: —To pay a dividend for tho half-year ending June 30, 1921, at the rate of Is 6d per share, absorbing £7500, and to carry forward to next year £6665 19s 3d

We are now reaping the benefit of our conservative policy and close organisation, a.nd clients may well feci secure in the knowledge tWt (to put it as a noted authority on finance has stated), apart from incoming premiums, the Standard has funds ample to meet losses in excess of the aggregate claims paid during the past five years and a-half, and behind that is £900,000 of uncalled capital—truly a very sound position. Before concluding 1 should like, as on previous occasions, not as a matter of form, but as a well-earned tribute of appreciation, to record the board's recognition of the services of our general manager and his staff. We feel sure you will heartily approve of the provision made to pay a staff bonus. I now formally move the adoption of the report and balance sheet. Mr J. Rennie, in seconding the motion for the adoption of the annual report, said that fortunately the Standard was a strong company, and therefore able to meet ilie present abnormal taxation demands, whereas many another weaker institution was calculated to break down and go under, and the matter of taxation demanded the most careful consideration by politicians in order that the trading concerns of the country should not be submerged.