Finance, Stocks, and Mining.

Free Lance, Volume II, Issue 85, 15 February 1902, Page 5

Finance, Stocks, and Mining.

AMONG the papeis lead at the Conference of Chambeis ot Commerce that by Mr John G Cobbe, of Feilchng, on State Fne Insurance was not without mteicst it onJ\ to show how easA it is foi a la\ man to la\ down the lules foi running an insurance concern Mr. C'obbe s panacea is State nre msuiance and lie is not the only outsider who has disccnoed this mode of muzzling the hie insurance companies, but. unioi tunatel\ fon the advocates of State hie insurance the Government cannot mt <\c To eNC with them The insurance companies, sell nidemmtv just as Mr C'obbe sells oidmarx merchandise. When the puce fixed for this indomnit\ does not Meld a tan piofit then the price is raised I hi* is what Mr. Cobbe probabh doe*, m his own business and nghth so 1-oitwo or three years in succession the lnsuiance companies have lost \n\ heaMlx on their firo risks in New Zealand and in spite of an advance in niemium rates last year. theie was again a fuither loss for 1901 + ■* •" Mr Cobbe disci edits this loss and cites the last balance-sheet ot the New Zealand Insuiance Compam in suppoit He stated that this compan\ had a 'trifle of £67,409 to distribute at its directors thought fit, this being in addition to £10,000 it had paid its shareholders during the yeai " Mr C obbe did not say so. but the language employed would lead the ordinan indn idual to believe that the New Zealand Insurance Company made a profit ot £77,409 last year out of its nre insurance business in New Zealand which is of course, rank nonsense The actual piofit of the New Zealand Insurance Company foi its last financial year was £■">/), 119 and the credit balance of £77,409 was made up b-> adding £22,290 the amount carried over from the previous If this sum of £77,409 is fully anahsed, it is derived as under — ■**"•■ The underwriting profit — that is the profit obtained from fire and maiine_ insurance — las-t year was onh £3o ohO out of a net premium income of £371, 48b oi 9 .57 per cent, which cannot be regaided as excessive Mr. Cobbe as a trader would scarcely consider 10 per cent profit on his turao'\ er excessn c -* * ■* But the profit ot £3"3. ,u. shown b\ the New Zealand Insuiance Company was not earned in New Zealand If the company relied on its business in this colony only, instead of a profit there would have been a heaw loss besides this a portion of the piofit was due to marine insurance It is only b\ spreading their nsks and accepting reasonably safe business m various countries. that insurance companies are able to sthow a profit .The New Zealand Insurance' Compam has branches and agencies throughout Australasia, the East South Africa and California, and sureh it will not be denied that the greater portion of the profit earned came from outride countries. * * * The total premium income ot the New Zealand Insurance Compain as already stated, amounted last \eax to £371 486 and, if we estimate that 10 per cent or. say £37.1.50 was obtained in this colony, then the company must have lost heavily for the fire losses for last year as show n by the Mercantile Record " totalled £41,103 To this has to be added the marine losses and the co«t of management. * * ■* Mr. Cobbe was unfortunate in taking the balance-sheet of the New Zealand Insurance Company to illustrate his point but. after arranging the figures to his own satisfaction he says 'Yet in the face of these facts intelligent business men are asked to believe that fire insurance is a losing business " Intelligent men are not asked to believe anything of the kind. Underwriters are not in business for their health's sake, but to make a nrofit which presumably, is the reason that actuates Mr. Cobbe in his own business * * * \Vhat intelligent men are asked to believe is that fire underwriting in New Zealand has been unprofitable for the past two or three years. There has been an abnormal increase in the number of fires, in the North Island particularly, and it is because of the unprofitable nature of the business that the rates were increased last year. * * * Mr. Cobbe enters a protest against the cost of management of fire in<uir-

.rue companies,. He doe^ not saj how lie arrives at hi.s conclusions but the experience at undeiunteis the world o\ er is that the management costs aver,im about 33 1 , per cent of the total preniiuni income Tins was not discovered \esterdaA but is the experience of \ i ars. The balance-sheet of the Gisborne Ga« ( ompam for the Aeai ended 31st Decembei last has been cnculated and the document is ien satisfacton The net profit foi the jeai amount 1 - to 12482 but of this £l->4"> l ('presents premium on shares sold so that the actual pioht was £1837 as agamst £1019 in the piMious a eai . The total amount <i\ailable foi chstiibution including the sum brought fon\aid is shown at 12908_ The riedit balance of £2908 lias been disposed of as follows Dmdend at the rate of 10 per cent £1277 leserve hind £<nO~ wntten off stores £100 cai i led fon\ ard £881 . The consump-tio-n of gas e>xhibited a very considerable me lease the consumtmon la.st year being 1.043.000 cubic feet, or 15 percent, more than m 1900 The net receipts fiom sales of gafe and residuals totalled £4735 4s lid as against £3900 9s 3d m the pre^ ions ear The tiade of the colom last \eai shows that there wa& a slight shrinkage in exports and an abnormal increase in imports Comparing the. returns for a period of six years the position is as

The balance of trade in 1901 amounts to only £1 064,967, and it is obvious that we shall have to draw unon past savings, or borrow heavily, or do both, to meet liabilities. Being a debtor country we have to find annually about £3,000,000 to pay mteiest on" public and private indebtedness and our trade balance is little more than a million sterling. The enoimous inciease in the unbolts amounting to £1.1 70. 361 is puzzling Either the traders are importing verv much in excess of lequirements, or the spending power of the oommunitv is still large There is no doubt that Government imports account for a> portion of this increase. Still the gain for the vear is very large If theie has been an e'xce&s of imports then there will follow a steady shrinkage until the normal level is reached. This drawing in appears to have alreadv begun for the past quartei exhibits a shrinkage of nearly £122.000 and the current quartei- will in all piobabihtv also show a retrograde movement ♦ * * The Commonwealth tariff although m operation throughout the past ouarter, has not affected the vear's eixnort*which show an increase, the* figures being £1,993,8% as against £1,858.582 The exports to New South Wales decreased bv about £100,000, but those to Victoria increased b\ £240,000. and to West Australia b\ about £3(3,000 We must expect to see a decrease this vear unless something extiaordmarv happens La^t veai our exports to South Afnca were valued at £831 216 as against £401 869 in 1900 so that there has been an increase of more than 100 per cent

Excess of "ie.n. Expoit«. Impoit- Expoits. £ £ £ 1896 .. 9.31K.763 .. 7 137 lO'i .. 2.181,654 1897 . . 10,010 990 . . H,0.)5.22.-3 • • 1,961,767 18'IH . 10,523,295 . K,2.'iO,52 l l . . 2,292,766 1899 .11,938,335 K.7.-i9,633 .. 1, 198,702 1<IOO . 1.^.242,()11 .. 10()4()09d .. 2,596,515 1901 12,SM1,424 11,SK) 457 .. 1,064,967