NEW ZEALAND INSURANCE COMPANY.

Te Aroha News, Volume VII, Issue 437, 15 January 1890, Page 4

NEW ZEALAND INSURANCE COMPANY.

DIVIDEND OF 12i PER CENT,

Auckland, January 8. The twenty-first annual meeting of the shareholders in the New Zealand Insurance Company was held at 2 o’clock this afternoon in the offices, Exchange Buildings, Queen-street. There was a large attendance. Dr. J. Logan Campbell presided. Annual Report. —The annual report was read as follows :—The directors have the pleasure of submitting to the shareholders a report of the business of the Company for the year ending 30th November, 1889. The premiums, alter deducting returns and re-insurances, amount to £269,893 10s 3d, being an increase of £20,447 16s 4d for the year. After providing for all ascertained losses, and paying an interim dividend of 2s 6d per share in July last, there remains a sum of £22,975 13s lid available for division, which your directors recommend should be appropriated as follows: —To reserve fund, £5,000 ; payment of a dividend at the rate of 121- per cent, per annum, £12,500 ; balance carried forward, £5,475 13s lid. The reserve and re insurance funds will then amount to £240,000. Your directors have gone carefully over the securities with the auditors, estimating present values and making reductions where such have been deemed necessary. Acting on the sugge.'tioa of the auditors, your Board have had certified valuations made of all the freehold properties belonging or mortgage : to the Company, by experienced experts The result has b en most satisfactory, showing that our investments could be valued at a considerably enhanced amount, much in excess of the valuation at present standingm our books. Messrs J. McCosh Clark and J. L. Wilson retire from the directory, as provided for by the Articles of Association, but are eligible for re-election. Messrs Boardman and Waymouth again offer their services as auditors. The dividend will be payable at the head office to-morrow, and at the branches and agencies on receipt of advice.—For the Board of Directors, J. Logan Campbell, Chairman. . STATEMENT OF ACCOUNTS. The statement of accounts for the year ending 30th November, 1889, was read as

The Chairman, in moving the adoption of the report, said : —lt is always a pleasing duty to be able to meet shareholders with a report ana balance-sheet in which a dividend is declared ; especially so is it pleasing considering the times we have been passing through to be also able to announce that the affairs of your Company are in a sound and flourishing condition. After having in the most careful manner scrutinised and adjusted every item of its assets in accordance with the value of the day, I shall now briefly remark on one or two points in the balance-sheet, and first it is very satisfactory' that on the'present occasion, as on the last when I addressed you, I can inform you of an increase in our premium receipts amounting to over £20,000. This sum has been contributed by our various agencies now located over the world, and we consider that by carefully selecting the field 1 of our operations, the wider we spread our risks, the safer and more profitable will be our business. It is a cause of regret in connection with other New Zealand companies that the rates, especially in the colony itsel r ", are inadequate to the risks run ; so much so, that though doing a good business it has resulted in little or no profit. The keen competition now carried on to secure marine . business has prevented us making much headway in this direction, and we have to contend against a host of commission earners who undermine legitimate business by offering “cheap rates.” The insured are often led astray and have ultimately to seek a remedy in vain. You will notice that there is a slight depreciation in the amount of rents and interest, which, taking into consideration the times we have been passing through, will nob cause any surprise. Our losses for the last half-year have been unusually heavy, chiefly made up by a long list of small losses, but swollen by two of a heavy amount, £5,000 each, incurred in America, where three cities were almost entirely destroyed, but in two of which only we were interested. With regard to the dividend declared, no doubt some shareholders may possibly consider it ought to, or at all events might, have been, larger ; but your directors consider it the wiser and safer policy to build up a large reserve fund, so that, in event of any large losses arising simultaneously from collisions at sea and conflagrations on shore, you may always rest assured the Company will be in a position to meet such losses, and

that happen almost what may, a dividend will be forthcoming. As regards the Company’s investments, the directors, as stated in the report, have gone over these in the most careful manner with the auditors. In order to satisfy them, and also shareholders, in the most complete manner upon this very material point, as to the real value of the freehold properties held by the Company, either as its own offices or mortgaged to it, your directors instructed the managers in the various cities to obtain reliable certificates from professional experts as to the present realisable value of these securities. The>e reports were submitted to the auditors, and it is a cause of satisfaction to know that even in present depressed times, a very large sum could be added to the amount which appears in the balance sheet representing bhis item of the Company’s assets. Finally I have to inform you that your Inspector, Mr Westin, has lately returned from a tour throughout the world, and he reports that our various branches and agencies are doing a satisfactory business and are steadily and surely progressing. Mr Reader Wood moved that the dividend should bo 15 per cent, instead of 12£ per cent. He feared the price of shares would be depreciated. This was seconded by Mr Vickers. The amendment was lost and the motion for adoption of the report was carried. Directors. —On the motion of Mr J. H. Upton, seconded by Mr Thos. Peacock, M.H.R., the retiring directors, Messrs J.’ M. Clark and J. L. Wilson, were reelected. Auditors. —Messrs A. Boardman and J. Waymouth were re-elected auditors.

At the annual meeting of shareholders in the above Company a lengthy discussion ensued on the motion of Mr Reader Wood as to paying 15 per cent, dividend instead of 12£ as recommended by the directors." ' 1 Mr Wood said he could not understand how the directors had arrived at their cision to pay per cent, instead of 15 per cent. He pointed out that the business had increased, that £5,000 was to be added to the re-insurance fund, and £5,000 to the reserve fund, while their securities might have been assessed at a higher figure; That meant a mrterial loss upon the shares. A year ago shares were £4. Now they were something like 65s cum dividend; And this was merely to carry forward £5,000 to the reserve fund. He saw no reason why 15 per cent, should not be paid; Mr Vickers seconded the amendment to have 15 percent, and said that his clients expected 15 per sent. Mr Rose pointed out to Mr Wood that twelve months ago, loan shares were £4, bub now they could be gob for about £3 with a dividend of 5s to come. This was simply the result of certain circumstances which had taken place in Auckland which depressed the market. Mr Upton considered it wise bo build up a reserve fund, more especially in an insurance company. He saw that at present the actual reserve fund was £135,000, and he was glad that it was still to be increased by £5,000. He also considered that the directors had acted wisely in not taking the full value given by experts with regard bo the securities held by the Company. It was not the desiie of the main body of the shareholders that a 15 per cent, dividend should be paid. He commended the directors for taking the stand they had in paying 12b per cent, instead of 15 per cent. It would have been betterif others had done the same. It was quite a mistake to think that the real value of shares was affected by small dividends. It was only the speculative value that was touched. He trusted that the shareholders would accept the recommendation of the directors. Mr Callan supported the amendment, and drew attention to the fact that alrhough the dividend was reduced the expenditure had increased to £70,000. This he thought was also worthy of attention. ' Mr Boardman said that the re-insurance fund here was more than ample for all pro bable contingencies until the end of the year. The £135,000 was really a reserve fund over and above all liabilities if the Company was wound up to-morrow. Mr Pierce said he cbincided with the action of the directors, and he must earnestly ask the shareholders not to support the amendment moved by Mr Wood. He considered 12J per cent, was a fair return upnn the capital invested, lb was only natural that where premiums increased, so must the expenses. The percentage had really decreased instead of increased. As they might at any time hear of a large conflagration, it was wiser to build up the reserve fund, and thus provide for an equalisation of the dividend.

Mr Reader-Wood, in replying, said that the Compmy could afford very well to pay 15 per cent., bub, unfortunately, the directors refused to do so. He thought it much more sensible to divide the money amongst the shareholders than to allow it to be written off twelve months hence. He had had a great deal to do with shareholders in other companies, and his experience of the reserve funds had been this: that atone time they were congratulating themselves on the magnificence of their reserve fund, and then some fine morning this reserve fund absolutely disappeared in the most mysterious manner. Reference had been made to the price of the Loan and Mercantile shares which fell from £4 to £3 sa, and it was asserted that the same cause which depreciated these would depreciate the shares of the New Zealand Insurance Company ; but that was an erroneous conclusion. The cause of depreciation in the Loan and Mercantile Company shares was simply the connection of that institution with another institution the shares of which had tumbled down. The shares of the New Zealand Insurance Company fell last year immediately after a dividend of 12£ per cent, was declared without any previous indication to the shareholders. Now, if the 15 per cent, were restored he felt sure that the value of shares would rise in the market.

Mr Boardman expressed the opinion that the reserve fund was sufficient, and the reinsurance fund, he thought, ought to be kept rather £IO,OOO above than £IO,OOO below the necessary figure. The auditors had gone thoroughly into the valuation of the Company’s properties, and the shares had been taken at the market prico at the date nearest to publication of the stock list. He thought the balance-sheet was a fair and accurate statement of the Company's affairs. The question at issue was then submitted to the meeting, when Mr Wood’s amendment was lost by twelve to seven, the original motion for adoption of the report and balance sheet being carried. After the election of directors and auditors, recorded in our last issue, Mr Vickers moved and Captain Worsp seconded. “That a vote of thanks be accorded to the directors and officers of the Company,” and this was agreed to unanimously. The Chairman returned thanks on behalf of the directors.

Mr Warwick Weston, General Inspector, returned thanks on behalf of the officers of the Company, and in doing so made reference to the foreign business transacted by the Company. During his two years absence from Auckland he had visited their agencies, which were, with the exception of Canada, now established

n almost every country and possession under the English flag, and also in foreign countries where the prospects of business were considered to be favourable for insurance enterprise. Agencies were established in India, China, Japan, Burmah, and the Straits . Settlements, the Argentine Republic, Chili, South Africa; and, by no means the least important, on the Pacific slope of America they had established a business and a name of which any insurance company might well be proud. In India and China the Company’s business was restricted solely to Europeans and foreign settlers, where the constructions were solid; but in Tokio, with its one million Japanese of which they occasionally read that one or two thousand buildings had been destroyed by fire in one fell swoop, the Company had no establishment and were doing no business. Elsewhere where the Company had estab-li-hed agencies business v'as favourable. Their advent had been somewhat late, and rates were low 7 , but notwithstanding these disadvantages, the position of the Company’s business was extremely satisfactory. Mr Weston spoke in terms of the highest praise of the officers and agents of the Company, and expressed his conviction that there was no fear for the future. The meeting then adjourned.

follows :— Dr. PROFIT AND LOSS. £ s. d. To dividend for the half-year ended 30th November, 1888 .. 15.0C0 0 0 „ Dividend for the half-year ended 31st May, 1889 .. 12,500 0 0 ,, Commissions, salaries, and other expenses .. 70,766 17 0 ., Government taxes and payntents to lire and marine associations 5,076 1 9 0 ., Fire and marine losses and appropriation lor unpaid losses 182,881 13 5 „ Balance . 22,975 13 11 £309,201 3 2 Cr. cG s. d. By balance at 30th November, 1888 20,088 2 7 ,, Fire and marine premiums less returns and re-insur-ances 269,893 10 3 „ Interest and rents .. 19,219 10 4 £309,201 3 2 BALANCE SHEET. 1)K. £ s. d. To capital 200,000 0 0 ,, Reserve fund 135,00t 0 0 Re-insuraiicefund 100,000 0 0 „ Investment fluctuation account, viz., Amount, last year 5,284 3 6 Less written off for depreciation in sundry investments 1.636 2 3 „ Appropriation for unpaid losses 32,643 0 0 ,, Deposits and other liabilities .. 25,428 14 6 ,, Balance *.-.• 22,975 13 11 £519,695 9 8 Cr. £ s. d. By Investments— Mortgages and shares .. 120,657 10 0 Company’s freehold efee premis s and other properties 313,534 8 10 United States bonds 12,524 8 5 Debentures 6,510 0 0 „ Loans at call, short periods, and fixed bank deposits .. 21 250 0 0 ,, Accrued interest and rents 3,308 2 0 ,, Bibs receivable 325 1 9 „ Branch and agency balances .. 41,070 15 1 „ Cash in bank and in hand .526 5 7 £519,695 9 8