The Sumter watchman. [volume] (Sumterville, S.C.) 1855-1881, 1871-03-15
LIFE ASSURANCE

The recent failures of two life com
pauies in New York-the eGreat West
ern Mutual Life" and the "Farmers' and
Mechanics Lifs'-have attracted much
public attention.
These failures do not surprise reflect.
ing insurance men. The organization
Of new companies in that city has been
of late years at the rate of more than one
every two months, no less than nine
having been organized in 1870. Too
many Of these enterprises were started
as private speculations, with little or no
regard to public utility. The special
end and aim was to furnish Official
position and salaries to men, too often
over ambitious, frequently incompetent,
and sometimes dishonest.
The, In some respects, excellent
article you copied few days since from
the Baltimore Sum-" ie in error in
saying that the "Great Western" was
{ e ofthe youngest, smallest, and least
successful of its class" 1t was organized
in 1865. There are nearly thirty Com
pauics in New York its Juniors" At
the end of 1869 only one of its compeers
had outstripped it 10 the race for busi-
ness, and it had passed by several Ofits
"Seniors" We do not believe that any
of its three thousand policy holders
think it was too small Neither its
youth, size, nor even competition (of
necessity had aught to do with its
failure; some of its Juniors" are re-
markably successful, and are conducting
their business on sound principles.
The failure OF the "Great Western"
was owing to the iacon,peteay Of its of
6cials. There does not seem to have
been any fraud on their part. Its tables
allowed loading of 80 per cent. on net
premiums for expense of management.
In 1869 it expended so per cent. of in-
come on this accouut, and paid OF death
claims only III per cent. Of income,
being less than was paid BY the "Mutual
Lite" of New York, and + per cent less
than was paid by the Equitable" Oh
same account, aud per cent. less than
the average Of Companies ofits own age.
Among its assets SO per cent. is reports
ed as due from agents, and nearly the
same proportion is represented BY
premium notes" and "loans on policies
Among its liabilities $50, 900 are report
ed as .due to agents on account of COM
missions" We have given these details
in order to show that its failure was not
the result of excess of mortality but was
owing to mismanagemeut-mismanage
ment of such kind that the merest
tylo in business might have avoided.
The failure OF the "Fsrmsrs' and
Mechanics" xas owing to fraud from
beginning to end. The Superintendent
Of Insurance says "that large number
of false or fictitious entries were made
Of policies that were never issued nor
even applied for. The expenses Of the
Company from the frst were enormously
large and entirely disproportionate to
the business done"
In fifteen months s6S,000 were ex-
pended for advertising, printing and
stationary. Salories and commissions
allowed officers and agents we're on
scale that no young Company could
stand.
The New York Underwriter, for De-
cenber, says:
ave have other Companies which, as
respects available meaas for reinsuring
their policies, are no more solvent than
the "Great Western" aud suggests
"that all such paper item Companies
ses their houses 10 order, aud heneeforth
be prepared With as much srealiEed assets
veil 10 hand, IS shall be equal to the
reinsurance liability"
We venture to add that among them
che editor would include some ofths
"eid aud large" companies, the writer