The purpose of this study was to examine the practices of both roads with respect to insurance of all kinds and determine whether merger would make possible a reduction in the cost of insurance.
Schedule A shows the kinds of insurance carried by each company today, the present annual premiums, and the average annual losses. It will be noted that on the average premiums have been exceeding losses by $389,406.
We believe that the merged. company would be large enough to carry its insurance through an Insurance Subsidiary organized under New York State Insurance law, for which we estimate the requirements at Capital of $1,150,000 and Permanent Surplus Fund of $1,800,000, or a total of $2,950,000. The annual interest at 5% for providing the funds for the organization of the insurance subsidiary would be $147,500, but the subsidiary would probably realize an average return of 3% on its investments.
If this could be done, we estimate the annual net saving in insurance costs would be $300,000. However, in view of the decision to conserve Capital money and not consider an Insurance Subsidiary at this time, we have shown no such savings or cash outlay in this report, but the estimated saving is a potential one at some later date when the merged company is in a position to make the necessary investment.
Schedule A
Insurance - Analysis of Present Annual Premiums and Average Annual Losses
Excess of
Present Average Premiums
Annual Annual over
Kind of Insurance Erie DL&W Premiums Losses Losses
Fire and Lightning
Selected Properties x x $162,040 $24,759 $137,281
Diesel Locomotives x 15,317 None 15,317
Contents - N. Y. City Piers x 3,976 None 3,976
Structures - N. Y. City Piers x 43,716 1,800 41,916
Leased Structures - Chicago x 1,088 None 1,088
Pier 8 - Jersey City x 7,166 None 7,166
Open Docks - Weehawken x 7,372 None 7,372
Diesels (All Risk) x 42,130 10,511 31,619
Passenger Cars (All Risk) x 9,416 962 8,454
Marine Operations
Fire & Collision-Marine Equip. x 17,790 4,757 13,033
Car Floats x 1,800 444 1,356
Builders Risk - Brighton x 1,175 None 1,175
Dry Docks - Brighton x 3,284 50 3,234
Float Bridges x 2,825 2,727 98
Floating Equip. - Cargo x 4,167 None 4,167
Passenger Liability
Railroad & Floating Equip. x 52,912 None 52,912
Passengers on two Erie Ferries x 1,200 None 1,200
Bodily Injury & Property Damage
Fork Lift Trucks, Tractors x 1,819 42 1,777
Piers Leased from N. Y. C. x 8,889 None 8,889
Surety Bond - Leased Piers x 535 None 535
Automobiles x x 42,559 14,543 28,016
Automobiles in Massachusetts x 712 50 662
Other
Boiler Explosion x x 4,105 4,899 794 Cr.
Bill of Lading Liability x x 28,060 16,374 11,686
Workmen's Comp. - N. Y. x x 6,250 None 6,250
Fidelity Bond x x 5,037 4,413 624
Theft x x 666 269 397
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Totals $476,006 $86,600 $389,406
