SOUTH BRITISH INSURANCE COMPANY. Auckland, October 10.

Te Aroha News, Volume VI, Issue 307, 13 October 1888, Page 4

SOUTH BRITISH INSURANCE COMPANY. Auckland, October 10.

- The annual meeting of the shareholders in the South British Fire and Marine Insur. ance Company was held at 11 a.m. to-day, when there was a fair attendance. Captain W. C. Daldy, chairman of diiectors, presided. Annual Keport. — The annual report and balance-sheet were taken as read in consequence of having been already published. Captain Daldy, in moving the adoption of the .report, said :—: — Gentlemen, — The report and balance-sheet now presented to you is le&s favourable than your directors anticipated from the returns to haud a tew weeks before closing ouryeai, but numerous marine 10.-ses during the month of July destroyed these anticipations. However, the present is an improvement on the last, although not what we could wish. The neb premiums are £4,900 in excess of last year, although we have paid £12,000 more for exchange and reinsntance business, proving that although we have reduced our lines and discontinued risks that had proved unprofitable our business is steadily increasing. There is a slight decrease, £220, in the interest account, arising from lower rates for deposits, and changes in our investments. Losses are £1,300 in excess of 1887 and expenses £360 less, ohowinsr the profit on underwriting is about £4,000, or 2 per cent, on premium income ; losse-*, £175,000 or 73 per cent, ; expenses, 25 per cent. You will naturally say that this io a very poor return. How can you account for it? The only reason I can give is inadequate rates caused by extreme competition, and depressed state of tiade, for we have no exceptionally large amount in any loss, but losses have been very numeious m both fire and marineneither ha\ c we had any marine losses on inferior ships, but all have been A 1 risks with regard* to Fire Section. With the exception of one branch New Zealand has shown loss, but we fully anticipate from what transpired at the recent meeting of the Underwriters' Association, that measures will be taken to harden rates and equalise tariffs. With respect to the items in tiie balancesheet, I am glad to &ay the balances at branches and agencies are £17,000 less than last year, thus showing that our managers have used their best endeavours to keep the accounts as close as possible. The losses are slightly in exce&s of last year (about £1,200), and the unpaid losses show only a difference of about C6O. One good feature "you will, no doubt, notice. Theoutstanding accounts are £56 only as compared with £15,796 last year. Investment fluctuation account shows an increase of £500. Al- ' though we have been obliged to write oft - some losses, these have been more than by securities realised and increased value of others. During the last "-''"three or four years the auditors have been placed in possession of certificates from y well-known experts wherever such securities are situated. Con&equently they show i-in our books at present depressed values, .. and should there be a general imVprovement in trade and property, we may confidently look for this fund '. being considerably augmented. I have - ono special remarks to make on our i' various branches. London has now been - consolidated, and brought into thorough good working order, and we feel confident ", -■jvehave laid the foundation of a safe, and £ we hope a profitable business in the future. : Since this branch has been solely under our own management, ~.,bh0 results have been satisfactory. The .^business is steadily increasing, and the fire jv/ratio is below the average, showing a fair %-profib. Cape shows improvement, also the 3? India and China branches. Australia and P^New Zealand have been our worst points year, especially in Marine. Reviewing fi^the operations of the year, we feel that al|gthough not showing such an improvement ifas we could wish, on the other hand our Sbuainess is more consolidated, and in better flfqrin than at any time during the past four feyears. Our investments also are in a most It'desirabie form, so that we san avail our|||seTves of them at any time, and they ha\ c Eb^eeh written down to the lowest point. All apie '..accounts are as close up as po3llpiblev.- Altogether, I must congratulate llyoiiif'upbn the present position of our Esompany, and after the very trying times ||which we- have had during the past few

years, and now that we are apparently in stnootu water, your directors feel that they are entitled to the confidence and support of the shareholders. In conclusion, I would add that should the general expectation of a revival of trade throughout the world be realised, our Company is in a position to take advantage thereof, and our next report should show better results. There is no doubt, gentlemen, that you have noticed our under-writing risks have been unfortunate in the South Pacific during the past year. With these remarks, gentlemen, and being propared to give you the fullest information that you may desire, I now move the adoption ot the report. Mi 1 \Y. S. Wilson seconded the motion. Mr Keesing said that before the report was adopted he should like somo information upon the item, " agents' commission, salaries, and other expenses, £51,338 1953 d." That amount appealed to him very largo upon the business done, but he had no doubt that the directors did their best to curtail expenses. Still he should like to know whether that large amount could not be brought down materially. He con- , sidered that, looking all round, they should ha\o had moie dividend out of that amount. It did appear to him enormous, and he should like the Directors to take that item intocaieful consideration. Of course, that was only one amount, but theie"vvere others that might also be dealt with. Mr David Goldiedid not think the repoit at all a favourable one. Of course the statement made by the chairman appeared all right, but in order to fully understand the position, it might bo well to compare the operations of their Company with others in the city. Take for instance the New Zeaand Insurance Company across the road. The different teturns would not at all show that the directors had done their best under the circumstances. During eight years ! they showed £b,395 actual loss upon their business while the New Zealand showed only £1,436 for a similar peiiod. That j showed that they had done a laiger 1 business in the South British Company, but evidently at much greater risk. During that period their expenses had been greatly increased. In the earlier years they [ had been able to capitalise their shares £1, ! so that comparing it with another Company it did not at all reflect creditably upon the management of the South British Company. The time had come when the shareholders should have more than a pittance offered to them. It seemed as if the directors and officers had beenusingup what should havegoneinto the hands of the shareholders. The day for enormous salaries had gone by, and the time had come when the shareholders should get something as well as the directors and officers of the Company. (Applause.) Mr J. Elkin said that in compa iy with other shareho dors he |had received copies of the Bank and Insurance Record. That showed that they had loot something like decimal 38 per cent, dining; the last seven years in underwriting. He had been in hope° that they would have been able to have contradicted that statement. The Chairman : 1 can answer that the figures are correct as far as our company is concerned. I cannot answer for the others. M r Elkin said that he though tperhapstheie might have been some mistake. That went to takeaway the great credit which the directors and management wished to take to themselves. There were evidently too inauy competing companies in the insurance business as well as other matters. They required either amalgamation or that the weakest should go to the wall. Having lost so much for three years, they had no guarantee that the losses might noc be equally heavy for the next three years. It was quite evident that business had been unsatisfactory, or that the dividends had been paid not out of the profits. He did not consider that this statement was a tiue view of the Company's affairs, or that it complied with the requirements of the Articles of the Association. He would ask the directors to note the word I " liability " in classes 93 and 98, and also to lead clauses 100 and 102. The directors, officers, and auditors, appeared to have forgotten that word "liability." He might remind them that there was an undisclosed liability in their Company in common with all other Insurance Companies They counted in premiums leceived without allowing tor the ntks covered which might or might not fall in at any time. Theie appeared to be no provi-ion for such probable losses, although mosl of the risks weie running for at least tix months, and some of them probably for tw r ely c. If the Company were to close i>^ door 1 ? to-morrow it would have a large number ot claims come in which would absorb the ieser\e fund. He haA perused statements of other offices in which there was a leinsurance fund. The one mentioned ovei the -way had 100,000 set apart under that head. Another smaller company had done the r^ame thing. He had no Hesitation in saying that tney had been paying dividends which they had not earned. He thought that it was an impoitant factor that if they had to re-insuie to-day it would cofet £50,000 upon all risks now running Although their fire insurances would run not more than 12 months at the longe&o, still their maiine risks lasted much longer. They never knew when they were done with, and in estimating the value of shares they should take into consideration the amount of this unknown liability. The auditors, no doubt, took the books and accounts just as they were placed before them. Under the present system of giving a vote lor eveiy share there was no chance for an outsider to come I in. He thought that while property ! should be represented in a larger proportion, fctill small shareholders should have some chance. He considered it monstrous that a man holding 1 2,500 shares should have an equal number of votes, and it Ayas abominable for persons in the office to be peimitted to secure proxies from abroad to obtain the return of any particular candidate for director. There was a system of breeding in and in. It was quite evident that new biood was required. He was dissatisfied with the management and if he could get out tomorrow he would do so if it would not entail too great a loss. Mr Nelson asked what was the pi ofi t on the year's business. The Chairman : £4,000. Mr Nelson : I think it is not commensurate with the risk run. The Chairman said that in order not to let matters accumulate he had belter reply to the speeches which had already been made. First he might tell Mr Kee&ing that their expenses had been reduced to 25 per cent., and the directors were doing all they could to reduce them still further. The main expense was not in connection with the management, but rather with regard to the expense incurred in getting "business. He thought that they were at a much less expense than any other similar company in the colony. In England he saw the expense of working bimilar companies came as high as thirty-seven per cent. They had reduced everything that they could but it must be remembered that if they carried retrenchment too far it would impair efficiency. Mr Goldie had referred to the working of another company. Such conduct was invidious, but

since ib had been done he must notioe it. The New Zealand Insurance Company started early, and was backed by large monetary institutions, which gave them a power which the South British had never possessed. They should remember chat their Company had opened up a foreign business and vyere now holding business in every part of the world, but they were not backed as the New Zealand Insurance Company was. Their company sustained very large lossos, which had been fairly grappled with. The directors had come forward with a statement which could bo got up no other way, for it was absolutely correct, lie had no hesitation in saying that there was no Company in the southern hemisphere whose accounts at the present timo could show a better statement for doing business than the South British Insurance Company. The difficulties consequent upon lauuching out into an European business had been overcome, and no*v i>o other Company was in a. better position ior doing' sate busincsb. With a revenue of £240,000 their largest loss on marine risk had been £2,750 and the next largest £2,500. Surely that was pretty safe business. Their lire insurance lottos had not been large in any particular instanco, but thoy had come in from al aiound. The losses of the Company from lire could not be judged from newspaper reports, as what appeared as South British £2000 loss often really meant only £1000 or £1500, the other being re-insured. Their re-msur-ances came to about £100,000 per annum and they had this year been mci cased by £12,000. Suiely that was safe business. Oi course they had losses, but that was only the s-trae as other companies. They knew that the Company had lost heavily by tires all over the colony, but still there had been no great losses, only the numerous small ones had tho etieet oi bringing the operations oi the year to a small profit. It was true that theie was too much competition, but the weakest must go to the wall. He might tell them that they weie making arrangements now to take over the business of another Company. That .should in the end improve in surance business. He would not refer to the question of the auditors as he had nothing to do with them. With regaid to the investments, he might state that they had £10,000 invested on t^ood securities. The undisclo ed liability talked oi by JNlr Elkin was covered by such investments. It had been asserted that they had divided profits which had not been earned, He denied that in toto. They had interest which they had divided and he delied Mr Elkin to show any year in which they had divided dividends which had not been earned either in business or as interest. Last year they had increased their fluctuation fund. They had written oil ±'5,000 for depreciation of property. Some pioperties had been sold — one at a piotit — and others had increased in value. The directors had before them continually reports of experts as to the value of thepiopeitie* of the Company, and he had no hesitation in saying that their properties weie at present undeivalued. It theie was any increase in the value of the property, it would go to the fluctuation fund. The question ot one vote for every shareholder was not for him to deal with. That rested in the hands ol the shareholders themselves. He would not refer to Mr Elkin's remarks about breeding in and in. They had done nothing of which they need be ashamed. It they had done their best the diiectois had a right to ask to be re-elected. Mr Elkin : 1 agree with that. The Chairman : I consider thai this, company was never in so satisiactory a htianeia l positioa or in such a good position to take hold of any good business which may be going as at the piesenb moment. (Applause.) Mr Nelson considered that the investment account was satisfactory, but the management of the insurance business was not satisfactory. He proceeded to quote liom " Brett's Almanac " to show the profitable business which was clone in the time when Mr A. Boaulmaii was manager of the Company. He said that he looked at the state ot things then and now, to see only a prolit of £4000, with a manager getting £1000 per annum. He thought that it they gave up the Insurance and simply became an Investment Company, it would be better, and within 12 months their shaids would n^e from £2 to £40. The Chairman said that they weie now reaping what they had sown a few year© ago, when they gave 15 per cent, and capitalised the bhaiei, since then the Company nad sutleied for their action. At thu time that was done to his chaigrin and he wished now that it had not beon done. It was no ut-e to blame the manager ior what was done by the shareholders and dnectoi->, and he for one did not wish to shitt the responsibility. Their manager .-submitted eveiything to the directors, who met twk-e a week. It the .-shareholders thought that the diiectors had become so aftete as not to be able to manage the business it was tor them to take steps to replace them. But atter what they had gone through in the past few years he telt that they were entitled to their confidence. Mr C oldie baid that it was in the recommendation of the diiectors that the Company embarked m the foreign business, and the Chairman knew well enough ;hat it was out of the power of shareholder to put out any director. What would-be the result if he tried ; simply that the servants of the company all over the world would be set to work to got proxies and return the man wished ior by the directors. The Chairman : I deny that. Mr Goldie : I can prove it. 1 found that when I stood for director that 1 was forstalled at Home by agents of the company who had secured the proxies. Mr Lamb thought that it was useless for people who had failod to get elected to come their carping. He believed that the business of the company was sound enough. Mr Barstow said that he had written to one agent in England to forward his applications for proxies, but that was the only one. Mr Hobbs also spoke about the bright future in store for the company. Mr Elkin asked if they were to take it for granted that the directors would look into the question ot the unknown liability. Captain Daldy said that had already been done. Mr Kee&ing asked if the Directors would see il the business percentage could nob be reduced. He believed that the profits of the shareholders wore lost in that £51,338 15s 8d business expenses. The Chairman promised that they would retrench where ib could be done without impairing efficiency. They were now lower than other companies. After a few further remarks the report was adopted.

DIRECTORS. Messrs W. C. Daldy and T. Morrin were re-elected directors.

AUDITORS. Messrs A. Boardman and J. Friar Clark were elected auditors at a remuneration of £50 each. A vote of thanks to the directors and management terminated the proceedings. x