P. AND 0. COMPANY.

Otago Daily Times, Issue 19996, 13 January 1927, Page 13

P. AND 0. COMPANY.

A DIFFICULT YEAR. MARINE INSURANCE CHANGES. SURPRISE IN THE CITY. (From Ode Own Correspondent.) LONDON, December 4. The report of the Peninsular and Oriental Steam Navigation Company for the year to September 30 last shows a profit of £776,933, 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 forvard 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, ano £153,157 is carried forward, as against tha £152,143 brought in. The mamtenane of the dividend on the deferred stock is stated to bo due to the conservative policy hitherto adopted, and not to the profits made. The directors also state that, providing the debenture sinking fund can be added to as in the past, there should bo sufficient in hand to pay off the whole £7,000,000 in 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 bo srid that the board Riv® B way to rampant 'ptimism, but a rather greater measure of confidence does seem to peep through the brief references to the position abroad,” remarks the hiancial 'rimes. “Investors in the ir. ana D. 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 P°l nt ol fact the directors explain that the .deterred dividend is the product of past care and not current income. In spite of all handicaps, tho board goes on providing tor the retirement of the company s indebtedness.” CONVERSIONS FROM COAL TO OIL. References are made to the sale of the steamers Nora and Dongola at prices considerably in excess of their book values, the difference being passed to credit ot the depreciation account for the rest ot the fleet. The Moldavia has been converted from a coal to an oil-burning ship, and the Narkunda and Na dora are similarly adapted. Several small lossesi have been debited to the insurance fu . na >. addition to which the New Zealand Ship-pin-T Company’s Paparoa was sunk off the coast of Africa and cost the company nearly £IOO,OOO, but the fund, at £0,32G,223, ahows 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 o pe cent. per annum, plus an additional 2 per cent, per annum when the dividend on tho P. and O. deferred stock was at the rate of 5 per cent per annum, or an additional 24 per cent, when the dividend was 10 per cent or more. ihe present report shows that *6 employees have deposited to date about £300,000, on which tey will receive interest at te per cent, per annum, payable on January l next. MARINE INSURANCE CHANGES. The news that “an important group of shipping companies, which has hitherto relied for insurance largely on its own. resources,” was to insure its vessels m the open market caused quite a stir at Eioyd, s and among the marine companies, for the secret of the negotiations which have been proceeding for some time had been well kept Rumour, however, quickly associated the 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. “The transaction must be one of very considerable importance,” writes the Marine Insurance correspondent of tho Daily Telegraph, “for so far as can be ascertained the fleets now to be insured are those of the P. and 0. Company itself, and those of the Federal, British India, New Zealand, Union of New Zealand, and, perhaps, a few other vessels in subsidiary conLo “ The news constituted a complete revolution in the practice of the shipping companios concerned for in recent years the group has covered its vessels through a fund or its own, insuring in the 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 os to the reason for this somewhat drastic change of policy. The generally accepted theory is that it is inspired not only by the favourable terms on which hull insurance can now be effected in the open market, but also because the funds accumulated for self-insurance oan be utilised for the provision ot 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 be on the lines of a full with average’ policy, or on the ‘free of particular average’ basis, which is at present in use in connection with the insurance of another important group of shipping lines. “With so large an amount as that which is involved in the insurance of several important fleets at risk it is improbable that one company will retain the whole of the risk, and it is possible that before entering into final negotiations the Royal Exchange Assurance had invoked the cooperation of other leading companies, and, perhaps of some underwriters at Lloyd s. In any case, it is anticipated that a large 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, the question of tho incidental expenses, such as brokerage and policy duty* will have to be taken into consideration. Doubtless such details will become apparent in due course, and in the meantime it may be said that the insurance is probably one of the biggest ever effected in the London certainly the biggest which any individual company has ever undertaken singlehanded.” . , . The Daily Mail comments: Although the news of this big insurance was unexpected, it is considered in the market tp be but the logical outcome of the policy of tho P. and O. Company in recent years. The abandonment of the self-insur-ance scheme is thought to be an indication that with insurance in the open market obtainable on favourable terms, the large sum hitherto set aside for insurance purposes can b© better utilised in other directions, possibly for the building of new tonnage. It was rumoured in the insurance market that the annual premiums payable on the insurance will amount to between £350,000 and £500,000, the total liability covered running into tens of millions.