INSURANCE SHARES FOR RECOVERY
I have been examining an interesting survey of the progress of our leading insurance companies in recent year... Here are some of the facts brought to light: gross profits in 1938 rose by over 25 per cent. compared with 1934 ; net profits increased by 12J per cent.; net profits, plus net interest, were 61 per cent. higher; assets expanded by near] Y 19 per cent. premium income, other than life, rose by 10 per cent., and published reserves by 14 per cent. In strikin z contrast with this rise in assets, premium income and reserve the prices of the shares of the companies in question ha' actually fallen as a result of depressed conditions in the stock markets. Is there scope for recovery? I think there is, given a return to more normal conditions in Throginorton Street. Hence I feel justified in calling the attention of the long-term investor to the deferred units of the Cornhill Trust which, as I have previously explained, has a portfolio consisting as to 86 per cent. of insurance shares, just over 8 per cent. of bank shares, and nearly 51- per cent. of trustee securities. Owing to the " gearing " of the Trust's capital, recovery would be reflected in a very sharp rise in those deferred units. A return to 1934 prices of insurance shares, for example, would mean a rise in the quotation from today's level of us. 3d. to 18s. 9d. The income yield is just over 3 per cent.
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