PUBLIC MUTUAL INSURANCE

Press, Volume LXXIV, Issue 22515, 24 September 1938, Page 9

PUBLIC MUTUAL INSURANCE

* DECISION TO GO INTO LIQUIDATION GENERAL MEETING OF MEMBERS POSITION ATTRIBUTED TO HEAVY CLAIMS (press association telegram.) AUCKLAND, September 23. A decision to go into voluntary liquidation was made at an extraordinary general meeting of members of the Public Mutual Insurance Company of New Zealand. In accordance with a notice of motion, Mr J. W. Hyland, public accountant, of Auckland, who previously had been appointed receiver for the debenture holders, was appointed liquidator. Information was given, that for the 14 months ended August 31, 1938, the loss was £34,614. Dr. A. T. Begg presided. In a statement on the affairs of the company, Dr. Begg gave a summary of the financial position, dealing particularly with the 14 months ended on August 31. In the underwriting account, the summary stated, commissions and other pxpenses were shown at £23,496, and fire, marine, and accident loss at £52.001. Income from premiums was £39,302. 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 were:—Cash in hand, £9l; cash on deposit, £10,000; motor-cars, £1670; furniture, £937; agency balances and sundry debtors, £6566; and the net item on the establishment' account, including the 14 months’ loss previously mentioned, of £40,543. Heavy Claims Dr. Begg expressed the opinion that the figures quoted made it obvious that the company’s position was caused by very heavy claims experienced during the period under review. Losses under third party motor-ve-hicle insurance had been very heavy, and operations in this business actually ceased on April 8, 1938, Fire business had also been unsatisfactory for the period, because of the number of claims received below or within the company’s retention basis. When it was decided that it would be necessary to supplant premium income from that source with working capital, a reorganisation was also effected, a decision being made to dispose of the South Island business, which showed a loss of about £ISOO a year. • It was now realised that it would have been wiser not to have entered into third party business and to have utilised the original debenture issue in the establishment of other business. For this reason, it was decided to make a new debenture issue of £300,000 at 6J per cent., instead of the original £12,000 at 8 per cent. A total of £9BOO of the previous issue was converted to the recent issue, and underwriting arrangements were secured for the balance of the debenture issue decided upon. The directors then felt that the company was placed in a satisfactory position. “Unfortunately, however, the aggregate of cliams over the last few months has been very heavy, and these placed the company in a position where the directors did not consider it wise to carry on. Mr Hyland had agreed to act in the dual capacity of receiver for the debenture holders and liquidator, for a maximum fee of £2OOO. After the appointment of two directors was discussed, the meeting appointed Mr Hyland as liquidator and agreed that the company should go into liquidation, the decisions being unanimous.