COMPANY MEETING

SCOTTISH UNION AND NATIONAL INSURANCE COMPANY

TOTAL FUNDS REACH £17,000,000 RECORD NEW LIFE BUSINESS MR. H. G. YOUNGER'S RE VIEW MR. HARRY GEO. YOUNGER, Chairman, presided at the one hundred and thirteenth annual general meeting of the shareholders of the Scottish Union and National Insurance Company held at Edin- burgh on May 4th, 1938. In moving the adoption of the report and accounts for the year 1937, he stated :

It will be noticed that we have passed another milestone of progress. The total funds have reached the £17,000,000 mark and, for the tenth year in succession, the new life business is greater than ever it was before. The quinquennial valuation of the assets and of the liabilities of the Life Department was made as at Decem- ber 31st last The results show a very large profit from mortality amongst the early bonus policies. Since the valuation in 1932, new mortality tables, based on the recent mortality experience of British offices, have been brought out jointly by the Institute of Actuaries and the Faculty of Actuaries in Scotland. Advantage was taken of the opportunity of making the present valuation by this table, which reflects the lighter mortality of recent years. In view of the fall in the general level of interest rates, the valuation rate of interest was reduced from 3 per cent. to 24 per cent. I am told that the combination of this new mortality table with interest at 24 per cent. provides the most stringent valuation basis employed by any British office.

The surplus disclosed by the valuation is sufficient to maintain the bonus at the high rate of £2 3s. per cent. pre annum on the sum assured under "Scottish Union and National" early bonus policies declared in 1927 and repeated in 1932. The interim bonus to policies becoming claims before January 1st, 1943, is at the rate of kr as. per cent. per annum. New policies effected subsequent to December 31st, 7937, which become claims in the current quin- quermium will be entitled to participate in this interim bonus. It is a satisfaction to the directors to be able to place before you so favourable a report. The maintenance of our high rate of bonus ought to be a source of great encouragement to our agents. I may say that the directors look to the shareholders, in their own interests, not only to place with the company all their own insurance business but to recommend their friends to do likewise.

ACCIDENT AND OTHER ACCOUNTS

The Personal Accident and Employers' Liability Accounts do not call for any special comment. The profit transferred from the former is £5,600, or nearly £1,000 better than last year, whilst the E.L. Account, despite an increase of £3,500 in premium income, is just able to make ends meet. There is little scope for profit- earning in employers' liability insurance.

The Miscellaneous Account shows an increase of £10,000 in premiums now totalling £241,000, but the result of the year's working on the combined account is a loss of £20,211. Two sections are responsible for this loss.

In common with the majority of the offices whose accounts for the past year have already been published, our experience in the motor section has been unprofitable. The standard of damages awarded to injured parties by judges and juries continues to increase, and the recent decision in the House of Lords in the case of Rose v. Ford, whereby it was laid down that loss of expectation of life may be included in awards for fatal accidents, has added materially to the difficulties of the companies transacting motor insurance. It appears obvious that the rates of premium must be increased if this section of our activities is to be placed on a profit-earning basis.

MEDICAL INDEMNITY AND MARINE

During the year we have been ngiged in a further clearing up of the situation in the Medical Indemnity section to which my predecessor in the chair referred last year. Ample provision has been made in our accounts for outstanding claims, and the special reserve in the Miscellaneous Assurance Account has been further strengthened by a transfer of £50,000 from the Profit and Loss Account. The Special Reserve now stands at the substantial figure of £100,000. We have ceased to transact Medical Indemnity business, and I regard the arrangements made for the running off in due course of our remaining conunitments as satisfactory and adequate.

The Marine Account shows an increase in premiums of £60,655, but the year has not been profitable. Indeed, 1937 has been a very unfavourable year for marina underwriters generally. So far as we are concerned, we have been relatively fortunate as regards total losses but, owing to the heavy storms which were prevalent during the autumn and winter months, claims for minor casualties were very heavy. During the year a minimum increase of 15 per cent. in the rates for hull renewals was adopted by the entire market. This was followed by later agreements tending to improve the position from the underwriters' point of view, althongh it is doubtful whether the steps already taken are adequate to put the business on a sound basis, particularly in view of the continued heavy losses of first-class steamers. Competition for cargo business, on the other hand, continues more keen than ever, and lines are being freely accepted at rates which are proving by experience to be inadequate to meet the normal losses which inevitably occur.

FIRE BUSINESS

Now let me turn to the Fire Account. Here we have results which are very satisfactory, although not quite so good as the previous year's excellent figures. The premium income is down by £5,600, due to the falling off in premiums in the United States of America. Intensive competition in that country, in conjunction with a period of years showing comparatively light loss ratios, has resulted in reductions in rates of premium. Notwithstanding the drop in premium income, our experience in the United States of America haS again been very satisfactory. Indeed, it is once again evidenced that our fire business is of rxcellent quality all round by the fact , that the claims' ratio is. 41.4 per cent. of the premiums. The profit transferred to the Profit and Loss Account is £173,126.

PROFIT AND Loss ACCOUNT As regards the Profit and Loss Account, the interest appearing in that account is practically identical to last year's figure, being only £200 up. The profits realised from the various revenue accounts ;mat £349,918, against which must be set £20,211 trans- ferred to the Miscellaneous Assurance Account. The net profit, therefore, is (in round figures) £330,000. This profit includes £170,000, being the shareholders' proportion of the Life and Annuity and also Sinking Fund profits which falls to be added to the Share-. holders' Fund as a result of the Quinquennial investigation already referred to.

A sum of £zoo,000 has been transferred to the " Maritime " General Reserve Fund and, as already mentioned, £50,000 has been transferred to the special reserve in the Miscellaneous Assurance Fund, bringing that special reserve up to the figure of £100,000.

It is proposed to pay the same rate of dividend as was paid last year. This will absorb £147,875, leaving a carry forward of £550,013. I shall inform you very shortly how the directors propose to deal with this carry forward. Since the report was issued the rate of income tax has been increased to 5s. 6d. in the k, and the figures I have just referred to will require to be adjusted.

I would now refer you to the balance-sheet of the company. The total assets exceed £17,000,000, being an increase over the previous year of more than £273,000. Stock Exchange Securities are all stated in the balance-sheet at or under the middle prices quoted on December 31st last, and a valuation of our Stock Exchange Securities as at that date shows a very substantial appreciation over the book values.

CAPITAL REORGANISATION PROPO3AL

The directors have recently had under consideration the question of a reorganisation of the company's capital, and they feel that it is right that you should have early knowledge of their intentions to bring forward for your consideration, toWards the close a this • year, certain proposals to that end. Your present shares arc either "A" shares of £20 each (LI paid up) or " B " shares of £10 each (k3 is. paid up). It is suggested that we take powers to split our shares and, subject to our obtaining such powers, to apply £300,000 out of the company's profit and loss balance to reduce the uncalled liability of the shareholders. Under the proposals we shall submit to you, each " A " share of £20 CO paid up) will become two new " A " shares of £m each (k t paid up), and each " B " share of Do (£3 15s. paid up) will become two new "B" shares of £5 each (£3 15s. paid up).

As our Acts of Parliament presently stand, we do not have the necessary powers to carry through these changes in capital, but we propose to take action in that direction and, as I have said, we shall submit the proposals in a concrete form for your approval later in the year.

I should like to express the directors' appreciation of the services rendered to the company by the members of all local beards of directors, and by the officials and staff at the head office and at all the outposts of the company both at home and abroad.

RETIREMENT OF MR. NICOLL

Now I have one other important matter to which I wish to refer. You will have observed the reference in the report to the change in the management of the company. Mr. James Gibson Nicoll has filled the position of general manager since 1925 and, having by a year or two exceeded the usual retiring age, it is natural that he should wish to relinquish his office. Under Mr. Nicoll's manage- ment the company has prospered. His energy and power are evidenced by the record figures which, year by year, we have been able to show in the Life Department. In 1924 the premium income of the company was £2,259,000 and the total funds were £' 3,249,000. In 1937 the premium income amounted to £2,685,000 and the funds totalled £17,182,000. These figures, attained in the comparatively short period of 13 years—and not exactly years of national prosperity —express more effectively than any words cf mine can do what Mr. Nicoll's management has meant to the company. Of this, I am sure, you will be glad to express your sincere appreciation and loin with me in hoping he may long enjoy his well-earned rest.

Mr. Thomas Edward Stevens, who succeeds Mr. Nicoll as general manager, has been trained in the Phoenix Assurance Company, Limited, and at present holds the post of Liverpool manager of that company as well as being on the head office board of the Union Marine and General Insurance Company, Limited.

The report and accounts were adopted.