NATIONAL INSURANCE COMPANY

Dominion, Volume 20, Issue 47, 19 November 1926, Page 3

NATIONAL INSURANCE COMPANY

ANNUAL MEETING MAINTENANCE OF STRONG RESERVE Dominion Special. Dunedin, November 18. The annual general meeting of the National Insurance Company of New Zealand, Ltd., was Jidd to-day. In moving the adoption of the annual report, and balance-sheet, the chairman of directors (Mr. John Moloney) said concerning the distribution of profits; “At the last annual meeting of the company reference was made to a cu’culai letter which had been received from some of the shareholders advocating the distribution of a portion of the reserves bv the allotment of a number of unissued shares of the company, the amount paid up thereon to be met by a transfer from the reserve fund. In these days of fierce competition it behoves every shareholder in an insurance company to further the interests of mat company by insurance with it and by encouraging others to do so. Not only do many shareholders neglect this duty, but they also at times exhibit an impatient desire to instruct the directors in the management of the company's finances. Of the thirty-eight signatories to that circular letter or requisition. eleven were entered on the share register in 1923, three in 1924, and fifteen in 1925, making twenty-nine of the thirty-eight who asked for a distribution of part of the reserves, and not one of that number contributed to the revenue of the company. It is these new shareholders who are clamouring for more. It is but just to say that premiums amounting to JK9 for the vear were received from six of tho other nine “During tho past year your directors have given the proposal careful consideration, and retain the opinion expressed last year that any alteration in the existing stalo of the capital and reserve funds would be a. mistake, for to comply with the request would be a departure from the principles observed by this and the majority of sound and well-managed insurance companies the world over. It is in the interests, not onlv of shareholders, but of our policyliolders also, that the reserves of the company should be maintained and moreover, increased at every opportunity as a guarantee to Hie. insuring public that whatever conllagration or catastrophe may occur, tho National Insurance Company will be in a position to meet its obligations. It is many years since anything in the nature of a catastrophe has been experienced in New Zealand or Australia, and this, it is to be hoped may never occur, but tho possibility is always before us. Your directors are of the opinion that any transfer of reserves to capital should be in the direction of a reduction of the shareholders’ liability and nt was in accordance with tins principle that transfers were made from the reserve funds of 10s. per share on each occasion in 1916, and again in 1923. If in the future tho funds of the company warrant it, further reductions of the liability of shareholders will be made from the reserve fund. , , State Competition. “One of tho features of the past year," be continued, “has been the establishnient of some of (be Australian State Governments of insurance departments with the object of entering into competition .with tho legitimate insurance companies. The Western Australian and New bouth Wales Governments have both instituted insurance departments to undertake the writing of workers’ compensation and other business. In the former State a monopoly of workers’ compensation business was threatened, but according .to recent advices wiser counsels have prevailed and tbo activities of the Government will be limited to active competition with companies alleady licensed by the Stale, tn New South Wales a workers’ compensation act .was recently passed containing provisions entirely foreign to those usually associated with legislation of this na. ture, and placing on industry and employers of labour an additional burden, the effect of which is viewed with apprehension by the business and pastoral interests of New South Wales. Owing to tho general uncertainty'with regard to the effect of the new act, a number of insurance companies withdrew irom the employers’ indemnity business altogether, but after mature consideration your directors decided, in the interests of our policy holders, to continue the protection afforded by the company in the past. Shareholders may, however, be assured that it is being carried out on conservative lines and that this policy will be maintained until‘such time as experience enables us to form a more accurate estimate as to the outcome of the business. In the Dominion also an amendment to the Workers’ Compensation Act has again increased the liability of the employer and here again acting on the principle already mentioned of affording every protection to the interests of our assurer! we shall endeavour to carry the additional liability.’’ Mr. FL. Baron said in regard to the distribution of profits that be bad looked into the matter and found that of 41176,000 underwriting profits in the past seven years, only 4172.000 bad been paid out in dividends, rather a small proportion. He thought a greater amount should lie distributed, as theirs was an insurance company and not. an investment company. The chairman gave some figures about three other companies whose capital was exceeded by their reserves—66 nuies. 30 times, and 12 times respectively. This policy, he said, had been followed. _ Mr. Baron said he was not against increasing the reserves, but thought a greater distribution should be made. The chairman asked the meeting to remember the many disasters which the company had bad to face and they would realise that it was better to leave the control of affairs to the board of directors, who were after all shareholders also.