§ 63. Mr. JACOBasked the President of the Board of Trade whether he has decided to adopt the recommendations of the interim Report of the Assurance Companies Committee dealing with the position of re-insurance companies?
§ Sir B. CHADWICKThe answer is in the affirmative. The Board of Trade propose to introduce legislation to give effect to the Committee's recommendations. In the meantime, while the Board have no power to pay back the deposits already made, they do not propose to take steps to enforce the making of deposits or the rendering of returns to the Board of Trade by existing companies, whether British or foreign, which carry on reinsurance business only, whether fire, accident, or employers' liability.
§ 64. Mr. J. WILLIAMSasked the President of the Board of Trade whether his attention has been drawn to the growing practice of the proprietors of insurance companies to appropriate a percentage of their reserve funds, created for the security of policyholders, for the removal or reduction of their own liability in respect of their shareholding; is he aware that one proprietary insurance company, after paying a dividend of 100 per cent, on its capital, recently appropriated half a million sterling from its reserve fund for the relief of the capital liability of its shareholders; and, in these circumstances, which are common to many of the insurance companies, will he consider some amendment of the Assurance Companies Act of 1909 for the relief and protection of the insuring public?
§ Sir B. CHADWICKI am not aware that there is a growing practice of the kind referred to, but my attention has been drawn to the particular case which the hon. Member doubtless has in mind. In that case the dividend paid for the year 1924 was 86 2/3 per cent, on the 1549 paid-up ordinary capital, and although £500,000 of the undivided profits of the company was used for the purpose of reducing the uncalled liability on the company's shares, a sum of £400,000 was at the same time applied out of the profits of the year for the purpose of increasing the company's reserves, while £65,000 was added to the Staff Superannuation Fund. As at present advised, I do not think that any amendment of the law is necessary in this respect.