The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1926-03-13
NORTH DAKOTA
BONDING FUND
SH0WS.PR0FIT
Has Successfully Pass
Through Most Strenuous
Years, Says Auditor

Operation Of the North Dakota |
state bonding fund, which carries |
bonds on all officers of the state or
political subdivisions requiring bond,
resulted in profit Of $1SO,Oll.97
from July l, 1919 to December 81
1928, an audit by F.. +. Burchard,
Grand Forks. shors.
The fund has $lSS,SS6.55 on de-
post with the state treasurer and
other assets which increase the to-
tai to $207 ,G77.59. the report shows.
The only liabilities, in addition to the
surplus, are M item Of S27 ,46l.2O
set up as an uncarned premium re-
serve and another of SODA which
represents reserve depreciation for
furniture and fixtures.
Since it was organized, the report
shows, the fund has had gross in
come Of 1858. 1860 and has paid out
$l53.790.3l. leaving IA net ipcomc for
the period of its operation of $2O4.-
1850. The difference between the
surplus and the net income is repre-
! scented by asset items of bills and
| accounts receivable and accrued in
terest.
Losses Total $S7,1S5.4S
The main items Of disbursement
during the period have been losses to-
| falling $S7.lS5.4S and reinsurance
premiums totalling $2S,394.25.
The report, which lists every risk
carried by the fund, shows that the
total amount Of bonds in force on
December 81 was S1G,l43,4G7.5O. Re-
insurance is carAcd in all cases
where bonds total more than $4,000,
! that being the maximum sum carried
by the state.
i In the early days Of the fund it was
! impossible to obtain reinsurance be-
cause old-line companies would not
deal with the state, the report states,
and during that time the fund sus-
tanned its greatest single loss, one Of
$56,000 in Slope county. Had rein.
sufancc been in effect ut that time
II the report points out, the loss to the
5 state would have been $3l. 900 les:
| than was the case.
Burchard recommended that the re
l insurance feature be continued "a
least until very large surplus hat
been created"
Losses Were Abnormal
Commenting on the history Of tn
. fund Burchard AYERS that it "has JUS
> passed through the most strenuous
years ever witnessed in this state
Economic conditions following thu
: war and its back-wash Of financia
ruin and disaster. with it's, incident
breakdown of personal morale, ha'
! resulted in more defalcatiOns thar
y have ever occurred before. Losses
have been much higher than formal
yet the department has operated sue
cessfully, paying all its losses, AM
4 now has Il balance to its credit aftc
making all proper reserves for an
tcipatcd future contingencies"
| Taking up the reinsurance qucs
ton Burchard said: "In the beginning
x the department was unable to secur
il reinsurance with old-line bonding
companies because Of their objection
IA to certain features of the law, How
c ever, the manager finally succeedc
e i'm placing reinsurance with Mort
G Dakota bond companies. At presen
t it is all written with the Norther
| Trust company Of Fargo and by it re
G insured in other North Dakota com
panies.
h Rate is $3.50 Per Thousand.
+ "The bonding fund is recognized ID
n other bonding companies as com
: pany and is given the same considera
: ton in the matter of reinsurance a
h one old line company gives anothe
:, in this respect. The fund receives
: commission or discount of 20 per cen
on all reinsurance placed. This re
suits in handling profit, gross, 0
t so cents per $1,000 of bonds rein
. sured over the limit Of $4,000 car
| ried net by the bonding fund. Tn
\ rate charged for bonds is $3.50 pc
5 thousand per annum.'
, In connection with its work. Bur
chard said, 1.-THE department has bee
active at all times to- protect an,
subrogation rights that might be &C
quired following losses from irrcyu
arities or defalcations. Money ha
/ been recovered and property, real an
personal, acquired from defaulters
t Most Of the property has been con
verted into cash and turned into tn
/ fund"
!, The only exception. he said, is