H —6.

3. In view of the uncertainty of all property values, the surplus for the year has been applied largely in writing down the values of office premises and in increasing the Investment Fluctuation Fund. i. The final report of the National Expenditure Commission, which was published during the year, makes not uncomplimentary reference to the Office, but I feel it my duty to dissent most emphatically from the recommendation which was made for an amendment of the State Fire Act to provide for payment of a part of the annual profits into the Consolidated Fund. An amendment having the effect suggested would constitute an arbitrary abrogation of the existing constitution, which makes provision for the return of surplus profits to policyholders by way of rebates, and which was given by the Legislature freely as an inducement to people to insure with the Office. That inducement has been instrumental in attracting and consolidating a large income and no part of the return due to policyholders could now be diverted without a breach of faith, if not of contract. Good faith is the essence of an insurance contract, and the effect of an amendment as suggested by the Commission might be most serious on the prestige of the Office. It is not to be implied from the foregoing that policyholders of the Office have been or are the only beneficiaries, for in practice the declaration of rebates under the provisions of the State Fire Act reduces all rates. The insurance companies have always followed the State Fire Office, and all payers of premiums, irrespective of whether insured with the State Office or not, receive consequential benefit from its operations. Also the Consolidated Fund derives a peculiar advantage through the particularly high proportion of income-tax which the Office pays, and the fund is assisted further from time to time, at some financial disadvantage to the Office, through investments in current issues at par, while private companies—mutual or otherwise —purchase stock in the open market. Thus, apart from the rate reductions effected in earlier years, the State Fire Office by (a) rebates, which since the first declaration have reduced premiums in the aggregate by £2,500,000, (6) income-tax payments totalling £274,000 in sixteen years, (c) investments, and (d) payments under section 5, Finance Act, 1931, has returned solid service to the community. J. H. Jerram, General Manager.

Revenue Account of the State Fire Insurance Office for the Year ended 31st December, 1932. £ s. d. £ s. d* Premiums after deduction of reinsurances .. 208,492 19 9 Bonus rebate to policyholders .. .. 25,293 17 9 Other receipts— £ s. d. Losses by fire and earthquake (after deduction of Interest, commission, and rent 47,129 13 5 reinsurances) .. .. .. .. 70,443 18 8 Less land-tax .. .. 380 9 2 Appropriated to Reserve for Unearned Premiums 46,749 4 3 (in addition to £88,763 19s. Bd. already reserved) 15,482 10 3 Income-tax .. .. .. .. 28,201 711 Commission .. .. .. .. 9,539 17 6 Salaries .. .. .. .. .. 24,263 14 0 Contribution to Public Service Superannuation Fund .. .. .. .. .. 508 17 7 Contributions to Fire Boards under the Fire Brigades Act, 1908 .. .. .. 7,834 11 1 Expenses of management— £ s. d. Travelling-expenses .. .. 2,370 15 5 Printing, stationery, and advertising .. .. .. 1,267 1 5 Rent .. .. .. 1,652 6 10 Exchange .. .. .. 47 14 9 Postages, telegrams, cablegrams, and sundry charges .. 3,994 18 8 9,332 17 1 ! Office equipment .. .. .. .. 1,269 13 6 Office premises: Depreciation .. .. 3,052 5 4 195,223 10 8 Payment to New Zealand Treasury under section 5, Finance Act, 1931 (No. 2) .. .. .. 3,484 11 0 Investments Fluctuation Reserve Fund .. 15,000 0 0 j Bad Debts Reserve .. .. .. .. 1,000 0 0 Office premises—Written off .. .. .. 38,400 0 0 { Amount of fire-insurance funds at end of year .. 2,134 2 4 £255,242 4 0 £255,242 4 0

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