COMPANY PROGRESS.

Otago Witness, Issue 3882, 7 August 1928, Page 76

COMPANY PROGRESS.

STATE FIRE INSURANCE OFFICE.

A larger annual revenue producing a smaller surplus, without being faced by increasing working expenses, is the noticeable feature in the past year’s results. The surplus of £35,883 is the lowest, with one exception, during the last eight years, and, coming at a peri- I when the premium income is higher tea it has ever been, points to the increasi business bringing more than its cor: spending proportion of risk. It mav be that the experience of the latest ‘ two years in the growing amount of claims has been exceptionally unfortunate, arising from causes that could not be foreseen, but it cannot but cause concern to the management to see the increase in claims in two successive seasons exceeding the increase in premium income. As in 1926, the rebate granted on fire premiums was at the rate of 12i per cent. After that rebate has been deducted and allowance made for reinsurances, the net premium income amounted to £181,846. Placing the net fire losses opposite the premium income for each year since 1919 gives the following relations, viz.,

The above columns represent results of a comparatively young business, and the figures are consequently not on a large scale. It is therefore only natural that, in a matter so uncertain as fire losses, the variation will tend to be greater proportionally than in a business with a larger turnover which gives the law of average more opportunity to operate. General expenses have been kept down. Salaries increased to £27,044, were the largest item, while Government taxation at £11.958 did not move in sympathy with the growing revenue. Commission absorbed £10,332, but there is no distinction made between what is expended on new and on other business. On the other side, a slight shrinkage occurred in the miscellaneous income.

Reserves now aggregate £670,061. Apart from the balance on revenue account they have benefited by transfers to different funds of some £10,500. The unearned premium section has reached £83.044 by its most recent addition, but the bulk of reserves are in the general account, which, at £489,634, represents what may be termed the fire insurance fund. Its rate of growth fluctuates with the annual surpluses, with the tendency latterly for the movement to be less pronounced. Liabilities come to £37.765 composed chiefly of Government taxes, outstanding fire losses and reinsurance premiums due. The losses settlement amounted to £11,97a at the end of the year—approximately one-eighth of the annual total—but the allowance depends largely on the extent and nature of the various claims. Land and buildings are down to £216.610. The value of the buildings is not stated, but they have received a depreciation allowance of £3321, as well as being written down by £4OOO. Presumally the depreciation allowance is a fixed rate on the capital value. Scattered as the business premises are, throughout the length and breadth of the Dominion, each property is affected by its own speial eni ironment, and the one rate of wastage may not necessarily apply to the whole. It wotnd be unusual in the ordinary business office to find such a large proportion ot the funds represented by land and buildings, although doubtless they bring in their full contribution to the revenue in rent of premises,_ either occupied or let. In this connection it is interesting to note that rent is entered under management expenses at £1961, which, it may be assumed, covers the charge on premises owned as well as leased. Investments total £398,993, Government securities war loan and othrwise—comprise rather more than half, while authority securities represent £87,696. Judged by their figures, the investments would appear to be entered at their market value. Money on fixed deposit and at short call (£75,000). toca?l} in bank or in transit (£76,348) would seem to be sufficient tor all claims that may be made, and, a , outstanding liabilities had been settled, would leave something over for more_ permanent investment. The sum of £8195 is entered as outstanding premiums. It is not clear if these were overdue in whole or in part, but when the money was collected it would go far to meet the outstanding fire losses. As the insti tutor of the premium rebate scheme, the State fire office has rendered a service to the whole fire-insuring community which, it has been claimed, had, in consequence, at the close of 1927, saved a total exceeding one million pounds.

Deo. Total General Sur31 Deserves. Bevenue. Expenses. plus. 1920 £316,057 £135,670 £54,115 £47,210 1921 ... 361,138 160,073 66,174 60,576 39,325 1922 ... 410,006 156,476 46,403 1923 ... 458,513 169,219 59,567 33,878 1924 ... 490,007 190,300 62,934 31,131 1925 ... 568,062 207,418 59,960 35,917 1926 ... 623,622 233,546 70,425 40,738 1927 ... 670,061 243,496 69,157 35.883

Premium Income. Fire Losses. Ratio p.c. 1920 ... £124,5:18 £21,182 17.01 1921 1.36,429 38.12G 27.95 1922 142,591 46,090 32.32 192.3 143,168 46,178 32.25 1924 143,065 60,817 42.51 1925 159,260 56,998 35.79 192G 172,975 79,06.3 45.71 1927 181,846 98,1.35 53.97