WINDING UP.

Auckland Star, Volume LXIX, Issue 226, 24 September 1938, Page 13

WINDING UP.

MUTUAL INSURANCE.

LOSS OF £34,600.

CHAIRMAN REVIEWS AFFAIRS.

A loss of £34,614 for the 14 months ended last August 31 was reported at ati extraordinary general meeting of members of the I'ublic Mutual Insurance Company of New Zealand, held yesterday. It was decided to go into voluntary liquidation, and Mr. J. Hyland was appointed liquidator.

The chairman of the company. Dr. A. 1. Begg, who presided, gave a summary of the financial positiou. dealing parti"cularly with the 14 months ended August 31 last. In the underwriting account, commissions aud other expenses, were shown at £23,497, and fire, marine and accident loss at £52,001. Income from premiums was £39,302, and the underwriting loss £33,786. The profit and loss account showed a net loss of £34,614.

The balance sheet showed liabilities of £59,808, represented by debentures, £23,700, sundry creditors, £25,608, and reserve for unexpired risks, £10,500. On the assets side was cash in hand, £91, cash on deposit, £10,000, motor cars, £1671, furniture, £937, agency balances and sundry debtors, £6566, and a net item on the establishment account, including the 14 months' loss previously mentioned, of £40,543. Debenture Issue. Dr. Begg said that the figures quoted made it obvious that the company's position was due to the very heavy claims experienced during the period. Losses under the third-party motor vehicle insurance had been very heavy, and operations in this business actually ceased on April 8, 1938. The fire business had also been unsatisfactory for the I>eriod, due to the number of claims received below or within the company's retention basis.

When it was decided to discontinue the third-party business, the directors decided it would be necessary to supplant the premium income from that source with working capital, Dr. Begg said. Reorganisation was also effected, the decision being made to dispose of the South Island business which showed a. loss of about £1500 a year. It was decided to make a new debenture issue of £30,000 at 6J per cent, instead of the original £12,000 at 8 per cant. A total of £9800 of the previous issue was converted to the recent issue and underwriting arrangements were secured for the balance of the £30,000 debenture issue decided upon.

'"The question has been asked why tile directors increased members' liability by making a fresh debenture issue," continued Dr. Begg. "Those who have asked this question do not know the circumstances, but in any case the position is that one liability has been offset by another 1 lability. The securing of new underwriting contracts and the debenture capital was an achievement, and the directors then felt the company was placed in a satisfactory position. "Unfortunately, however, the aggregate of claims over the past few months lias been very heavy and these placed the company in a position where the directors did not consider it was wise to carry on." Directors' Efforts. Efforts had first been made, added Dr. Begg, to dispose of the business, and the directors had been personally prepared to meet a substantial proportion of the liabilities though they had never drawn directors' fees. The total amount granted to them and forgiven was £775. They had many times paid their own travelling expenses and assisted the company financially. Shareholders would now realise that the deficit was not so great as the levy would indicate, Dr. Begg said, but provision had to be made for all kinds of contingencies. The directors had arranged that certain claims should take priority over the interests of debenture holders. Mr. Hylaud had agreed to act in the dual capacity or receiver for the debenture holders and liquidator for a maximum fee of £2000. The directors did not propose to vote on the question of a liquidator.

After the question of appointing two directors was discussed, the meeting appointed Mr. Hyland as liquidator and agreed that the company should go into liquidation, the decisions being unanimous.

It was suggested that an advisory committee of three should assist the liquidator. This matter was left to members and the liquidator to arrange.