SOUTH BRITISH INSURANCE COMPANY.

Nelson Evening Mail, Volume VIII, Issue 51, 27 February 1873, Page 2

SOUTH BRITISH INSURANCE COMPANY.

The Directors of the South. British In-* surance -Company have notified byl adyer-; tisement that a meetipg of .the shareholders? will be held in March to- consider' the pro-'. r priety of .'ipcreanng the number of ehfires and ; the ;, capital^ of the^ cprapany. . timely notice) giveni tosthe: shareholderft

[ will afford them ample opportunity for the full consideration of. this important question. It appears that the proposal has the : iitianimquß approval both- of the directors 'in AuclfiancKahd the local directors and agents Vat the^various branches in!; the other provinces of the colony, and these are the laTgest shareholders in. the company. We presume that the objects fs'ottght to be obtained are, an* increase in the number of shareholders among property holders and insurers, and in-creased-security to the insured; to form a reserve fund at once from the premiums received on new shares sold, and to make it prudent for the directors, through increased, papital and the reserve fund, to extend their business by taking somewhat larger risks than they feel justified in doing at present, preferring to act prudently and lose some. business rather than take too large . sums l in any one risk. A large number of .shareholders in an Insurance Company means a large number of persons who are directly interested in the success of the company: it also means a large num-. ber of persons who are security that losses . incurred will be paid. But an additional number of shareholders in an unlimited liability company; like the South British diminishes the risk to each shareholder of unlimited liability. What may be a heavy responsibility , to a few persons becomes comparatively light, to, a much larger number, and hence many persons who would ordinarily shrink from investing in an unlimited liability company feel that they can do so : without misgiving when there is a large number of persons with means to share, and to lessen therefore the common responsibility. The advantage which the South British already possessed' in this respect, from its numerous proprietary; will be increased as the number of its shareholders is increased. We are not aware what may be the exact nature of the proposals in regard to details which the directors will make to the meetiDg; indeed it is obvious these ' could not now be made public, but as they are the. largest shareholders in the company it may, be assumed that they will not propose any change which, in their opinion, would have the effect of depreciating the value of their present large property in the company. It will be, reasonable, therefore, to conclude that the new issue would be put upon the market at a fair market price, and that the market .would not have too large a number of shares thrown upon it, but only sufficient to satisfy the legitimate demand of the public for them. The premiums received by the company would form the start of a reserve fund, and be the property, of course, of all the shareholders. The want of a reserve fund in an insurance company

cannot be too speedily supplied. Such -a fund adds security and gives, stability to a company ; it is ready to meet an extraordinary loss without calling upon the shareholders to subscribe more capital for •that purpose; and without putting too great a strain on. the ordinary revenue of the company ; while a well-invested reserve fund also adds to the income of the company. Every insurance" company For continuation of news see fourth page.

which desires to proceed on a sound basis, and to carry on its business with prudence, is ever anxious to have an ample reserve fund ready to meet emergencies. We are glad, therefore, to be able to think that the directors of the South British see the importance of having capital paid-up in fair proportion to the business they are doing, and of at once making a substantial . beginning in the formation of -a reserve fund.. Thinking men, who consider before they either invest or insure, will doubtless view with satisfaction these features of the proposals. Of course a young company, like the South British, with a small paid-up capital, could not, with prudence, take as large amounts in single risks as a company with larger paid-up capita], and a reserve fund. The amount of particular risks in the South British are, in practice, limited to a sum considerably below what is taken by older offices, but some of the business thus prudently, under present circumstances lost to the company, might be taken were its paid up capital increased, and had it a reserve fund. To carry out the proposals made would be to enable the directors to increase, where prudence dictated, the amount of any single risk. The business of the company would therefore be increased in this direction, as well as through the new business which would be brought to the company, directly and indirectly, by new shareholders. So far as we have been able to gather opinions upon the project under consideration, some, and those by no means the least capable of taking a comprehensive and clear view of the subject, look upon it as a bold, yet prudent and farseeing policy, calculated to largely benefit the company, and improve its standing and position among those whose confidence it is desirable to have. There are others, however, who think that to increase the number of shares will be to decrease' their value to some extent. Possibly this might be the case, but only very temporarily. There are precedents enough to show that increase of capital in well managed joint stock companies is soon followed by a rise in the market value of the stock. This is so common an occurrence that we need not specify instances of it. We presume that whatever may be the number of shares issued, they would be allocated, as was the original issue, among the various provinces of the colony, and thus only a limited number would be put on the market in any particular province. The entire question will no doubt be calmly and carefully considered by the shareholders, and rash and precipitate conclusions avoided. The company has been well and prudently managed so far; it has met with a gratifying amount of success; H^e directors in Auckland and the local HRrectors and agents in the other provinces HHus& clearly have worked cordially and Harmoniously together to bring about the fljfljfesults obtained; while the colonists have Bprounds for feeling an honest pride that SOjhis company, originated in the colony, ■mas supplied to them another opportunity Hpf managing an important branch of their ■pwn business, and of proving how dealing Rfwith one another, rather than with straringers, may result in great mutual benefit, wand in a general and complete success.