R. M. SIMPSON.]

37

I.—B.

26. Curiosity has been aroused by the fact that you have been able to give the returns of all the premiums received by the companies during the last five years, including the foreign companies: now, how did you get the figures for the latter? —I do not know that I am justified in telling you how to work them out, but they can be worked out. At the meeting of the council each year the losses are given by each company. 27. You mean your Insurance Council, as it were ?—Yes. 28. What do you call it—the Underwriters' Association ?—Yes ; it is' at the council meeting. We meet once a year, and at that meeting the representative of each company gives the president the total losses made by his company for the twelve moiiths. 29. Foreign companies and all ? —Yes. But the individual amounts are not disclosed. The president knows them, but he simply adds them up and gives out the total. The revenue can be obtained from the amount that we pay towards the expenses generally. So that those figures can be taken as being quite correct. Mr. G. W. Russell : Unfortunately I did not hear the first part of your evidence, Mr. Simpson, so my questions will be, perhaps, of a more general character than those of other members of the Committee. 30. Mr. G. W. Russell.} I understood you to say that certain companies operating in the colony had lost something over £7,500 in five years on their underwriting ?—Yes ; but that includes an estimate 31. Would you kindly explain whether that means that after paying managerial expenses and charges the payments made on account of losses exceeded the premiums received by that amount ? —With the addition of a correction of £31,000 for the additional amount of premiums between 1897 and 1901. Supposing you take a certain amount in premiums during the year, at the end of the year it takes a certain amount to what we call reinsure, or provide for outstanding liability. The amount in 19C1 was larger than it was in 1897, and to correct that—to provide for the additional liability—an amount of £31,000-odd had to be set apart. 32. The point I want to get at is this: Your evidence goes to show that on the purely fire business the companies during the five years, deducting from the gross profits the managerial expenses and charges, have made nothing ?—That is so. 33. That is your evidence ?—Yes. 34. Mr. Barclay has drawn attention to the fact that, notwithstanding this, the companies have been paying dividends : can you tell the Committee from what sources the companies are able to pay dividends, although, according to your own statement, they have not been making a success of underwriting ? Is it not from the investment of the capital and the reserves that have been put away in previous years?—So far as my company —the Phcenix —is concerned, the New Zealand business has very little influence on their balance-sheet at all. Their total premiums are three times as much as the whole of the premiums collected in this colony. Therefore the result of business in this colony is a very trifling matter to them. Of course, they pay their dividends out of the world-wide business that they do, and the investment of their funds. 35. I am not speaking to you as the manager of the Phoenix Company, but as an insurance expert, because I am leading up to another point?— The same thing that I have explained with regard to my own company applies to most of the English companies— i.e., the New Zealand business is a very small part of their income. The same thing also applies to the local companies, but not quite to the same extent. The income of the four local offices is about £800,000 —that is, they collect premiums to the extent of double the total amount collected in the colony. Out of that their fire revenue collected in the colony is about £175,000. The fire premiums which they get in this colony are about 20 per cent, of their whole revenue. When you try to estimate what their profit ought to be, or what their dividend ought to be, from the result of the business operations in New Zealand you may be very wide of the truth. You may not be able to make any deduction that is reliable at all. 36. How many companies are operating in the colony ? —About twenty-five, I think. 37. Do you think that the setting-up of another rival institution, as the Government institution would be, having to depend upon its own merits, upon its own management, and upon its own rates, possibly, for success, would be a good thing for the colony—speaking now as a resident of the colony?—I do not see that it should be. It certainly would have to employ our methods. It is not to be supposed that on the spur of the moment a Government Fire Office could establish a routine better than we, and have the business ability generally. 38. Do you, as an expert, think that a large Government Department, having agencies at the various country post-offices for the purpose of accepting insurances, and working a big machine in that way, could possibly be worked upon satisfactory lines ?—I am sure it could not. The idea is perfectly absurd. 39. You consider that insurance is a highly expert business, which would require the utmost care in its management, if a Government office were established, in order to protect the colony from making substantial losses ?—There is no doubt of it. 40. I do not know whether it is a fair question to ask you, considering the position you occupy, but do you think, speaking generally, that the salaries paid in connection with insurance business to the highly placed officials are beyond the fair mercantile value of the services of these gentlemen? —I do not think so ; Ido not think they are. The men in such positions have very large responsibility, and exercise very great discretion, or, rather, have a very great discretionary power. For instance, take my own case. I am fifteen thousand miles away from my directors ; no one here has the slightest control over me. I can pay a loss if I like; I can draw as much money as I like. And there is no doubt that anybody in a similar position must be invested with equal power.