STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1936.

Appendix to the Journals of the House of Representatives, 1937 Session I, H-06

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1937. NEW ZEALAND.

STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1936.

Presented to both Houses of the General Assembly pursuant to the Provisions of the State Fire Insurance Act, 1908.

State Fire Insurance Office, Wellington, 30th July, 1937. I have the honour to submit the thirty-second annual report of the State Fire Insurance Office for the year ended 31st December, 1936, with the Revenue Account and Balance-sheet. The following are the comparative figures for the last three years :— T 1934. 1935. 1936. Income-'— £ £ £ Premiums 200,581 199,898 202,987 Other receipts, less land-tax .. .. .. .. 43,750 39,303 42,432 Premium on conversion of securities .. .. .. 45 329 Outgo — Bonus rebate to policyholders .. .. .. 41,211 41,233 41 563 Claims .54,751 53', 151 43^517 Working-expenses (exclusive of income-tax and Fire Board contributions) .. .. .. .. .. 53,073 53,779 53,347 Fire Board contributions .. .. .. .. 7,940 7 994 8 225 Income-tax .. .. .. .. .. 41^296 „ , , . . Per Cent. Per Cent. Per Cent. Katio 01 claims to premium income .. . . .. 27-3 26-59 21-44 Ratio of working-expenses (exclusive of income-tax and 26-46 26-9 26-28 Fire Board contributions) to premium income Ratio of Fire Board contributions to premium income .. 3-96 4-0 4-05 Ratio of income-tax to premium income .. .. 17-41 11-83 20-34 £ £ £ Carried to reserve for unearned premiums Surplus, apportioned as follows :— Payment to Treasury under section 5, Finance Act, 1931 (No. 2) .. .. .. .. .. 87i Written off Office premises .. .. .. .. 26,000 27,000 23,500 Reserve Fund .. .. .. .. .. 25,601 2,731 '471 Bonus Rebate Reserve .. .. .. .. .. 30,000 33,500 Total £52,472 £59,731 £57,471 Reserves and funds at 31st December . . . . . . £1,016,688 £1,049,420 £1,083,391 1. Both premium and investment income for 1936 show an improvement over the figures for 1935. The actual increase in premium income is greater than the figures indicate, for the reason that premiums for 1936 are shown less rebate for the month of December, whereas the figures for 1935 are inclusive of the rebate. The alteration is consequent on the operation of a new system of bonuses which was instituted as from the Ist December, and which is referred to hereunder. The comparisons also require to be viewed in the light of the steady decline in the average rate for fire insurance which has taken place. The Government Statistician reports that the average rate over all classes of business, hazardous or non-hazardous, in 1931 was 9s. 3d. per cent., whereas it had fallen by stages to Bs. 2d. per cent, in 1935.

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2. As from the Ist December, the rebate in operation at that date was made a permanent rating reduction from premiums, and, in addition, a further bonus to policyholders ranging up to 25 per cent, was declared. Under the new system adopted, bonuses are restricted to those who have been insured with the State Office for a period of twelve months or over, policyholders of two and three years' standing receiving proportionately larger bonuses. The principle of bonuses out of earned profits in an increasing ratio up to three years expresses in a practical form the mutual ideal of the original State Fire Act of 1903. Competitors have met the State Fire system of differential bonuses partially by a flat bonus, also restricted to their policyholders, who thus benefit by the competition of this Office, although not to the same extent as do supporters of the State Fire Office. There is gratifying evidence that the bonus has met with warm approval, particularly of our older policyholders whose insurances are now being carried by the State Fire Office at a lesser cost to them than ever before. The cost of the bonus will be provided out of the profits for the year under review. 3. The staff has maintained a high standard of competitive efficiency throughout the year, and I am pleased to be able to record once more my appreciation of the excellent results attained with their co-operation. J. H. Jerram, General Manager,

Revenue Account of the State Fire Insurance Office for, the Year ended 31st December, 1936. £ s. d. £ s. d. Premiums after deduction of reinsurances .. 202,987 111 Bonus rebate to policyholders .. .. 41,562 17 1 Other receipts— £ s. d. Losses by fire and earthquake (after deduction of Interest, commission, and rent 44,596 11 6 reinsurances) .. .. .. .. 43,517 3 3 Less land-tax .. .. 2,164 5 0 Income-tax. . .. .. .. .. 41,295 10 0 42,432 6 6 Commission .. .. .. .. 8,184 16 9 Salaries .. .. .. .. .. 31,113 911 Contribution to Public Service Superannuation Fund .. .. .. .. .. 514 6 1 Contribution to Fire Boards under the Fire Brigades Act, 1908 .. .. .. 8,225 9 2 Expenses of management — £ s. d. Travelling-expenses '.. 2,442 10 0 Printing, stationery, and advertising .. .. 1,367 14 2 Rent .. .. .. 1,515 10 10 Exchange .. .. 44 12 0 Postages, telegrams, cablegrams, and sundry charges 3,964 10 0 9,334 17 0 Office equipment .. .. .. .. 1,242 16 11 Office premises: Depreciation .. .. 2,956 18 0 187,948 4 2 Bonus Rebate Reserve .. .. .. 33,500 0 0 Office premises—Written off . . .. .. 23,500 0 0 Amount of fire-insurance funds at end of year .. 471 4 3 £245,419 8 5 £245,419 8 5 Balance-sheet of the State Fire Insurance Office on the 31st December, 1936. Liabilities. Assets. £ s , <}. Capital authorized by the State Fire £ £ s. d. Government securities .. .. .. 564,341 12 2 Insurance Act, 1908 .. .. 100,000 Local-authority securities .. .. .. 243,638 18 9 Less not raised .. .. .. 100,000 Rural Advances bonds .. .. .. 14,175 0 0 Nil. Fixed deposits and at short call .. .. 177,000 0 0 Bad Debts Reserve .. .. .. •• 1,500 0 0 Land and buildings •• .. .. .. 110,076 13 ]] Reserve Fund .. .. .. •• 745,673 4 5 Outstanding premiums .. .. .. 10,520 5 4 Investments Fluctuation Reserve Fund .. 59,000 0 0 Interest accrued but not due .. .. .. 10,529 15 6 Reserve for unearned premiums .. .. 104,246 9 11 Rent accrued or due .. .. .. .. 331 19 () Bonus Rebate Reserve .. .. 112,500 0 0 Rent overdue .. .. .. .. 112 0 0 Reinsurance Reserve Fund .. .. .. 60,000 0 0 Cash in Reserve Bank of New Premium and other deposits . . .. .. 818 0 6 Zealand at Wellington, or in £ s. d. Outstanding fire and earthquake losses.. .. 1,363 0 0 transit to Wellington .. ..39,115 17 2 Government taxes .. ■ • • • ■ • 65,295 10 0 Imprest Account balances : Head Sundry creditors .. •• •• 13,168 14 10 Office and branches .. .. 362 6 8 Other amounts owing by the Office — £ s. d. 39,478 310 Reinsurance premiums due .. 4,135 9 10 Commission .. ■■ 1,386 4 9 Printing, stationery, and advertising .. .. 123 16 2 Postages and sundry charges 522 13 10 6,168 4 7 Fire-insurance funds, as per Revenue Account .. 471 4 3 £1,170,204 8 6 £1,170,204 8 6 9th September, 1937. J. H. Jerram, General Manager. L. H. Osborn, Deputy General Manager. I hereby certify that the Revenue Account and Balance-sheet have been duly examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed therebv.— J. H. Fowler, Controller and Auditor-General. Approximate Cost of Paper.—Preparation, not given ; printing (1,804 copies), £3 ss.

By Authority: E. V. Paul, Government Printer Wellington.—l 937.

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