P. & 0. COMPANY.

Press, Volume LXIII, Issue 18900, 15 January 1927, Page 16

P. & 0. COMPANY.

A DIFFICULT YEAR. MARINE INSURANCE CHANGES. (PBOM OUR OWN COBBESFOXDENT.) LONDON, December -i. The report of the Peninsular and Oriental Steam Navigation Company for the year to September 30th last shows a profit of £776,953, to which is added £142,143 brought forward, making a total of £919',096, after providing for depreciation. This total compares with £955.002 for. the preceding year, when the brought forward amount included was £101,033. The dividend is maintained at 10 per cent, for the year. The dividend on the Preferred Stock requires £152,000, reserve for redemption of the Debenture Stock receives £274,688 as compared with £261,607 last time, and £133,157 is carried forward, as against the £142,143 brought in. The maintenance of the dividend on the Deferred Stock is stated to be duo to the conservative policy hitherto adopted, and not to tho profits made. The directors also state that, providing the debenture sinking fund can be added to as in the past, there should be sufficient in hand to pay oft" the whole £7,000,000 by 1940. The feeling that with the coal stoppage over the general outlook for export trade has brightened finds indirect support in the nature of the comment made by the directors. "It cannot be said that tho Board gives way to rampant optimism; but a rather greater measure of confidence does seem to peep through the brief references to the position abroad," remarks the "Financial Times." "Investors in the P. and O. Company have to thank the prolonged policy of financial conservatism pursued by their Board for the dividends declared in respect of the past year. In point of fact the directors explain that the deforred dividend is tho product of past care, and not current income. In spite of all handicaps, the Board goes on providing for the retirement of the company's indebtedness.''' From Coal to Oil. References are made to the sale of the steamers Norc and Dongola at prices considerably in excess of their book values, the difference being passed to credit of the depreciation account for the rest of the fleet. The Moldavia has been converted from a coal to an oil-burniug ship, and the Narkunda and Naldera are similarly adapted. Several small losses have been debited to the insurance fund, in addition to which the New Zealand Shipping Company's Paparoa was sunk off the coast of-Africa, and cost the company nearly £IOO,OOO, hut the fund, at £3,328,223, shows an increase on the year of about £50,000. A year ago a scheme was started whereby deposits might be made by the employees bearing interest at 5 per cent, per annum, plus an additional 2 per cent, per annum when tho dividend on the P. and O. deferred stock was at the rate of 5 per cent, per annum, or an additional 2 J per cent, when 'the dividend was 10 per cent. or more. The present report shows that the employees have deposited to date about £300.000, on which they will receive interest at 7i per cent, per annum, payable on January Ist next. Surprise in the City. The news that "an group of shipping companies, which has hitherto relied for insurance largely on its own resources," was to insure its vessels in the open market caused qnjte a stir at Lloyd's and among tho marine companies, for the secret of the negotiations which have bed! proceeding for some time had been well kept. Rumour, however, quickly associated tho Peninsular and Oriental group with the shipping combine mentioned, and the Royal Exchange Assurance with the further statement concerning "one of the oldest companies, which continues to occupy an important position in the London market." "Tho transaction must be one of very considerable importance," writes the Marine Insurance Correspondent of tho "Daily. Telegraph," "for so long as can be ascertained the fleets now to be insured are those of the P. and O. Company itself, and those of tho Federal, British India, New Zealand, Union of New Zealand, and, perhaps, a few other vessels in subsidiary concerns. "The news constituted a completo revolution in the practice of the shipping companies concerned, for in recent years the group has covered its vessels through a fund of its own, insuring in tho open market only two fleets of cargo steamers and an''excess' line on some of the very highest values of passenger fleets. Naturally, conjecture has been busy as to the reason for this somewhat drastic change of policy. The generally accepted theory is that jt is inspired not only by tho favourable terms on which hull insurance can now be effected in the open market, but also because the funds accumu-. lated for self-insuranco can bo utilised for tho provision of new tonnage. As yet no announcement as to the terms on which the contract has been effected has been made, but it is believed in the market that when these become known they will prove to bo on tho lines of a full 'with average' policy, or on tho 'freo of Particular average' basis, which is at prcsenFin use in connexion with tho insuranco of another important group of shipping line's. ' "With so largo an amount as that which is involved in tho insurance of several important fleets at risk it is improbable that one company will retain tho whole of the'risk, and it is possible that before entering into final negotiations the Royal Exchange Assurance had invoked the co-operation o£ other' leading companies, and, perhaps of some underwriters at Lloyd's. In any case, it is anticipated that a largo amount of reinsurance will be effected, and underwriters are speculating as to the form in which this will be placed. In similar cases in the past insurance has been given off on the original terms, and at the original rates, but with so large a transaction as that now contemplated, tho question of the incidental expenses, such as brokerage and "policy duty, will havo to be taken into consideration. - Doubtless such details will become apparent in due course, and in the mcantine it may bo said that the insuranco is probably one of the biggest ever effected in the.London market. It is certainly the biggest which any individual company has ever undertaken single-handed." The "Daily Mail" comments: "Although the news of this big insurance was unexpected, it is considered in the market to be but the logical outcome of the policy of the P; and O. Company in recent years. The abandonment of tho self-insurance schemo is thought to be an indication that, with insurance in the open market obtainable on favourable terms, the large sum hitherto Bet aside for insurance purposes can bo better utilised in other directions, possibly .for the building of new tonnage. It was rumoured in the insuranco market that tho annual premiums payable on the insurance will amount to between £350,000 and £500,000, the total liability covered running into tens of millions."