Salvage Collections of $1,090,078.15 exceeded collections for the preceding year by
$61,671.34. There has been no change in our established policy of neither treating salvage
property, of which there is always a substantial amount on hand, as a profit—nor carrying it
as an asset until it is reduced to cash.

After setting aside $100,000 for the Depreciation of the Building and providing for
Federal Income Tax, the Net Profit from Underwriting, plus Investment Income amounted
to $1,186,009.64.

Deducting an additional $45,000 for Unreported Losses, $338,537.87 to write Securities
down to actual market values and after payment of dividend, as well as making provision for
dividend declared and payable January 1, 1935, there was added to Surplus and Undivided

Profits, $619,077.97.

The Company's Real Estate, consisting of its Home Office Building, located at icxd Broad¬
way, was appraised by the New York State Insurance Department at $10,000,000 on June 5,
1933. At the present time it is 91% rented. During the current year $100,000 was set aside
for the Depreciation of the Building.

Investments in bonds and stocks valued at $9,041,151.97 are stated at their market values
as of December 31, 1934, with the exception of stocks of subsidiary Companies which are
carried at $343,180.47 less than their book value.

During the year the Company's holdings of United States Government and New York
State bonds were increased by $371,000.00.

On June 30,1934, this Company contributed to the New York Casualty Company, $179,910
representing $4.50 per share on 39,980 shares of stock of that Company held by it, to enable
that Company to write its securities down to actual market values and maintain its Capital
and Surplus at approximately $1,150,000.

Premiums in Course of Collection amount to $1,881,571.13 from which is deducted an
estimate to cover premiums due more than ninety days. Overdue premiums are not allowed
as an asset by the New York State Insurance Department notwithstanding that the majority
of such items are collectible. One of the outstanding accomplishments during 1934 was the
substantial reduction in overdue premiums. It was estimated that these items would aggregate
$117,838.01. However, final reports from Branch Offices show that the actual figure as of
December 31, 1934, was $108,105.86, or 11%, of the total premiums in course of collection.
This ratio of overdue premiums to total outstanding premiums is the lowest ever reported by
the Company.

$1,183,840.40 Cash in Banks and Offices reflects a very satisfactory cash position. This
is an increase of $465,051.13 as compared with December 31, 1933.

The Reserve for Unearned Premiums of $5,748,991.50 is based on 50% of annual premiums
and a pro rata basis for term premiums in force being in excess of the Insurance Department's
requirements. Inasmuch as it is not permitted under the law to take credit for unearned
premiums in connection with reinsurance ceded to companies not qualified in the State of
New York, we carry duplicate reserves amounting to approximately $100,000 with our sub¬
sidiary companies in Canada and Mexico.

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