New-York daily tribune. [volume] (New-York [N.Y.]) 1842-1866, 1859-12-06

Net liability OF the socetv Nov i
". 10, 1 l655.,.. .......ss.s tbIl5I'
; ssei.!s... NOV. T. +iessa1
Pad w e~P'~' as5azIBslsnoe sgAins. the
losses doe sGr3I Society 81 07s0+
.sI,ss72a Total............ 1924
while Mr.. Nelson's figures, put into q similar form,
stand as follows:
pts.snt value Of am, Present value Of 10
assured. lol tufe pIenm.ns, sAffO''
gurplns.......,..... ss2 ee4 socety........ sl-ol
To,sI............e3S752lo s5,s77,2o
Mr.. Wright, it will be observed includes the paid
mn capital Of the Society among ts Liabilities. 80 Tar
as the shareholders are concerned no doubt this Item
is technically liability, and ought 10 appear that
side of the account. But 20 far as the poiieytOlders
are concerned for whose interests alone in Mass-
chusetts need be supposed TO be soicous, il plain
that this sum may be left out OF the account. The
eapita il subscribed and paid in for the very purpose
of being applicable TO the payment OF claims against
the Society. Suppose the shareholders should choose
TO paw into the treasury of the Company half million
more Of capital: il not plain that the concern would
be stronger, and not weaker Yet Mr.. Wnghts as
sumption converts one Of the main elements of strength
into a proof Of weakness. The capital, which was
s25 3e3 the date in 1855, taken by Mr.. Wright, had
become 1886 302 on the Both of November, 1853 The
invested assets Of the Society which were Sl 6I at
the date in 1855 taken by Hr. Wright, had become
1891 201 Mr. Wright did not have access TO the latest
returns but we presume the accuracy OF the larger
sums will not be questioned, as they exhibit only the
natural increase. As Mr.. Wright calculated the liza
bties for November 1853 II is plainly Just and prop
err that the assets should not be taken from returns
three years earlier when those of even date are ae-
cessible, az they now are.
Tbese items alone corrected make a difference Of
$44 $50 in favor of the Society reducing accordingly
Mr.. Wrights apparent deficit by corresponding
amount.
The principal element of difference, however, re-
mains TO be considered
no col aesured the outstanding pOl-
ces of the Society is $40 52S 1884, The present value
of this amount, obtaining by dscOunting the several
claims for the periods which will elapse before they
become due Is rather less than half az much, VIZ.
s4745 1l6. Now the Society will of course continue
TO receive premiums upon all these policies until they
are cancelled OF until the lives fall In and the present
value of these premiums discounted in the came way
az the claims 10 which they attach is 81 4f6, OO9 ac-
cordng TO Mr.. Nelson's calculation; and hence he
concludes that the net liability upon the present bust
ness of the Society is equal only TO the difference be-
tween the present value of the amount assured and
the present of the premiums receivable thereon ms
difference is 1893 l07; q which is amply covered
by the assets
Mr.. Wright, however, introduces a new element
and gives to il most tremendous importance. The
actual premiums charged by company. be mlintans,
are considerably in excess Of the mathematical pre-
miums which were believed in the outset 70 be SUM-
cient TO compensate it for the risks incurred These
mathematical premiums" were increased by what IL
called loading designed TO cover errors, contingent
cies expenses and profits. Now, if the present value
Of the actual premiums is exactly ascertained without
allowance for the loa ing, it appears that there IL
reckoned as part Of the means now on hand TO pay
liabilities something which was regarded at the be-
ginning as simply tssary allowance to provide for
possible errors, contngeI cles expenses, ana prohts
These errors contingencies, and expenses may sun
occur and therefore Mr. Wright cOntends) 1t is not
safe now TO neglect 10 allow for them.
We believe that acuares contend that such al
lowance not necessary for the reason that the future
or new business of Company which has been estab-
lehed fifteen years may fairly be supposed TO
bear the current expenses of carrying on its operations
But we are willing TO admit that some allowance should
| be made under this head and this we find to be the
general opinion Of the best authorities, as stated in
works upon the subject and especially in the evidence
| before the Parliamentary Commission of 1853.
1t remains, then, TO be considered what is fair
allowance under this head of the account No general
| rule can be devised of universal application The
allowance must vary according 10 the age OF the com
pany the mode Of organization, and the principle upon
| which its premiums are established. The principle
adorted by Mr. Wright il will be observed would re-
ouire reservation Of 81 GO, $50 for the purpose.
without discussing the theory upon which this principle
| Is based we think II clear that such an allowance
il monstrously dsproportioned TO the necessities OF
| the case The reader must understand that It If
admitted that if the company were obliged to pay
to-day the present value claims of all the now
outstanding against It, to mature at various
intervals from one TO fifty sixty years hence linn
| tied BY the most remote death of pocy-holder il
would have a surplus of s62 ,O9f according to Mr..
Nelson who takes II for granted that he may set oil
Agalst the prtftIl Ndlut OF uHSuItu, Tue
present value Of the premiums which the Company
expects TO receive upon the very sane policies. Mr..
Wright denies that it is safe TO set OF the present value
Of the whole of the future premiums, because they
have been "loaded" to meet errors contingencies,
penses and profits. But when he demands that the
Company ought now TO have in hand 81 ,6S3, 2j5 ia
meet this class of items, he 10 US 10 be quite I'M
reasonable. That sum, if now reserved and invested
would yield an annual income, at four per cent, oil
S67 $50. IL cannot be pretended that sum Of that
magnitude, and above the mathematical value OF
the premiums received is annually required 70 manage
the present business of the Company.
| There feems TO be general agreement Of opinion
among the best authorities that something should be
set down by way of allowance for the loading, in val
uing the condition Of life assurance company. The
witnesses before the parliamentary commission who
were most precise upon this point were Mr. EdmOnds
who thought the allowance ought 10 be II per cent,
and Mr.. Farr who thought one-seventh Of the present
value of the actual premiums receivable should be de-
Quoted. The surplus shown by Mr.. Nelson's figures is
more than enough TO meet the average Of these re-
qurements and falls short by trihng sum Of the
most eXactlDg.
But it is 10 be Observed finally that test of this
Sort although highly desirable if absolutely
sary in the Of the life insurance companies Of this
country, which are almost invariably mutual CON-
panies with shareholders having but limited La
blily, becomes comparatively unimportant with re-
| gard 10 British concern ike the international -
which has a large body OF wealthy proprietOrs bound
10 meet It's engagements TO the uttermost penny of
their private fortunes. The subscribed capital of the
international" is 100000 of which, as we have
seen f79 COS has been paid in. This capital alone is
thus more than enough TO cover the whole of it, lis
bilities upon the extreme plan adopted by Mr.. Wright
in his calculation. But behind this capital the
shareholders, liable have said to the extent Of
their property. Ii Is not surprising 20 find that COM
paBy situated does not find necessary in order 70
retain the public confidence, TO leave in the general
treasury of the concern a larger sum than tho million
Of dollars very nearly which the international" has
on hand. Ii more is required the shareholders must
furnish it, but it cannot be pretended that, in any