SOUTHERN CROSS ASSURANCE COMPANY

Southland Times, Issue 21897, 24 December 1932, Page 3

SOUTHERN CROSS ASSURANCE COMPANY

EXPENSES REDUCED FURTHER PROSPECTS IMPROVING Energetic measures to meet most difficult conditions were reported by the governing director of the Southern Cross Assurance Co. Ltd. (Mr T. J. Confoy), who presided at the annual meeting of the company, which was held on Saturday. The chairman, in presenting the report, said:—l must again, on this occasion, refer to the continued difficult financial conditions that prevailed during the period under review, particularly in the early part of the company’s financial year, when conditions reached their lowest and hardest in Australia, but showed a slight tendency to improve toward the latter end of June. However, New Zealand, as usual, following in Australia’s wake, felt, for the first time, the full effects of the depression, with the result that conditions over in the Dominion are now almost as bad as the worst experienced in Australia. South Africa, on the other hand, although it is still on the gold standard, finds that its internal financial affairs are also approaching a deplorable condition, so it can be safely said that wherever the company was transacting business, it had to contend with probably the hardest conditions it has yet faced, and much severer all round than in any previous year. The directors, realising the serious position of affairs, immediately curtailed the new business activities of the company’s field staff, owing to the fact that to maintain its record new business rate would have meant incurring many thousands of pounds additional cost, which they considered would not be warranted by results. They, therefore, set an allotment of £1,000,000 new business for the year, and it is very satisfactory to report that this task was accomplished without increasing the past rate of field cost. The future policy of the company is gradually to increase the rate of new business productiveness without any extra cost, and in this respect I have to report, with great satisfaction, that for the first four months of the present financial year, as compared with the same period last year, an increase of £30,000 sums assured has been shown, and present indications from business coming to hand are that the increase desired should be attained by June 30 next. For the first time on record the renewal income of the company decreased, but we have been very fortunate in this respect, inasmuch as most of the other Australian companies, including many of the old mutual institutions, have shown decreases during the last two or three years. The loss, in our case, has been caused practically through the increase of cash surrenders. This surrendering of policies is to be deplored, but in many instances it became absolutely essential for people who required money for immediate wants to accept the available surrender value. These policy-holders, having once known the benefits of life assurance, are certain to re-assure themselves again in the future when conditions become more congenial, and the company will have this connection to work on. Policy-Holders Assisted.

The directors, bearing in mind the fact that many people would be short of ready cash, adopted a system of prepaying endowment policies maturmg during the next few years by allowing the assureds sums of money sufficient for their immediate wants, and in addition giving them policies for similar or even larger amounts with premiums paid thereon for a period of three years in advance. In this way they were able to face present difficulties and be assured of life assurance cover for the next few years, when conditions should again be normal, as they will be able to resume payments. This method has proved very effective and acceptable to all concerned, and the company has over £6OOO renewal premiums paid in advance, which is as present down among the liabilities, but will, during the next few years, be absorbed into the revenue account of the company, thereby giving an additional income without any extra cost. That the question of surrenders is a serious one is denoted from a report from a speech made on May 30 by Mr P. D. Touzel, A.1.A., to the Actuarial Society of Australasia, in which the experience of five leading offices for the years 1929-31 is shown, as follows: 1929. 1931. Ordinary Ordinary Dept. Dept. Surrenders .... 5,147,460 11,423,533 Wastage (surrender and forfeiture) 14,578,228 26,566,160 It will be noted that your company’s increase in such items was not greater than the average percentage of the five institutions concerned, so that we can safely say that our renewal income has stood the test as well as any other company established here. You must feel gratified with the fact that your company has paid all claims promptly to the extent of £317,357 since its inception, and has thereby proved itself a vital factor in the financial world. The claims experience has been an excellent one, as last year only 51.6 per cent, of the actuarial expectation was paid, and this clearly denotes the great care that is exercised by your directors and medical officers in dealing with each and every proposal submitted to them. The claims experience of the company has been excellent right throughout its career. Low Working Costs. Although the company had a smaller income to work on, and had to hold its business and usual organization together, involving a greater amount of work than in the past, it is pleasing to report that, through economies instituted during the past few years, a further reduction of 2.3 per cent, in the percentage of all expenses incurred in the production of premium income was possible. This makes a total reduction of 30 ner cent, in this respect during the past six years. The following comparison is very interesting:— Percentage of all expenses incurred in the production of premium income: Ist year 162 per cent. sth year 80 per cent. Sth year 67 per cent. 11th year 47.7 per cent. The cost of obtaining new annual premiums, according to the world recognized authorities—Messrs Stone and Cox—shows your company as having the lowest cost rate of any Australian company established during the last 20 years, the nearest such institution to the "Southern Cross” showing an expense rate of 10 per cent, higher, while several of the companies show 100 per cent, greater. Considering that your company is writing more business than any of these companies, and as a matter of fact almost as much as six or seven of them together, the reasonable cost of production reflects creditably on the economical management and on the highly efficient staff employed in its procuration throughout the company’s ramifications. The Commonwealth of Australia Insurance Act and Regulations of 1932 became law during the year, whereunder certain deposits were required, and it is satisfactory to note that the amount we have lodged with the vari- j

ou- State Governments was greatly in excess of Governmental requirements of £51,000. All deposits in full elsewhere in New Zealand and South Africa have been made. The mortgage on the company’s head office building, Melbourne, has been repaid in full, while there was only a small balance owing on the property in Dunedin, which has since been paid off. The business in New Zealand was well maintained considering the times,, and a satisfactory amount of new business at the right cost was obtained. The directors and staff are all hard workers, and greatly interested in the company’s welfare. Director’s Journey. I have to report that I left Australia on March 16, returning on October 10, and during my period abroad visited every branch and thoroughly inspected the whole of the company’s organization throughout South Africa. I was very pleased with the capable way in which the directors and general manager for South Africa (Mr G. Vander) had been handling the company’s affairs there, and I am quite satisfied that your interests are being well protected in the Union. Through reorganizing and revitalizing the South African staff, I am pleased to report that improved returns are now being shown. I would like to mention that the South African head office directors at Cape Town passed a minute on May 27, 1932, as under:— "The directors wish to place on record their very keen appreciation of Mr Confoy’s first visit to South Africa, They consider that he has galvanized the whole staff into electrical activity, his presence having the effect of converting pessimists into optimists, and slow people into live wires. The endless publicity Mr Confoy has S- cured on behalf of the company has brought the Southern Cross into prominence throughout the Union. Mr Confoy’s visit, notwithstanding the conditions prevailing, was opportune, and has acted like a tonic for all connected with the company. The directors unanimously thank Mr Confoy for the energy and enthusiasm he has shown in connection with the company’s operations throughout the Union.” I extended my trip to the United Kingdom, and the experience gained thereby of modern life assurance conditions will be used for the benefit of the company. I now take this opportunity of thanking head office and local directors for their supervision of the business in Australia and elsewhere during my absence, and also to congratulate the general manager (Mr A. Aubrey) oil the capable way in which he managed the whole affairs of the company during such period. He was able to increase the business productiveness during the last quarter of the year at a decreased cost, and to keep the momentum up, with the result that on my return I found the new business for the first four months of the present financial year was greater than that for the corresponding period last year, as reported earlier in my speech. Mr Aubrey was whole-heartedly assisted by the head office executive and all branch managers and both indoor and outdoor staffs. Their loyal support during my absence was very gratifying, and shows the fine spirit prevailing throughout the whole company. Present indications are that the returns of the company will show a marked improvement at the end of the current year. The wholehearted support of all shareholders is earnestly requested. The retiring directors, Dr. J. H. Bennett and Mr H. E. Walduck, were reelected unopposed. FINANCIAL FACTS. 11 YEARS’ PROGRESS OF THE SOUTHERN CROSS ASSURANCE CO., LTD. NEW BUSINESS (Ordinary Department); Sum assured completed, £16,836,689. CLAIMS EXPERIENCE: 51.6 per cent, only of Actuarial Expectation. Claims paid, £317,357. COSTS OF EXPENSES TO PREMIUM INCOME: Decreased during last six years by 30 per cent. FUNDS (Ordinary Department}: £511,318. PAID-UP CAPITAL: £300,000. ASSETS AS PER BALANCE-SHEET-£BS3,OO7. —P.B.A.