The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1871-01-13

Editorial Opinions Of the Leading Journals
UPON Current Topios-Compiled Every
Day for the Evening Telegraph.
LIFE ASSURANCE FAILURES.

F,oa, the ~ Y. Boening Post.
The course of State Superintendent Miller,
in scrutinizing with severity the condition of
the life insurance companies, and compelling
those of them which cannot offer entire safety
to their clients to close their business, natu-
rally attracts general attention and comment
1t is certainly very important to the public
that the protection extended to them by the
laws of the State, against fraudulent or unsafe
policies of assurance, be real and not a mere
trap to catch and betray their confidence
But the sequestration of the property and
money of corporations, in the hands of re-
ceivers, for the purpose of winding up an
intricate business, is an extreme measure, so
wasteful in itself, and SO shocking to public
credit, that it ought not to be adopted except
in cases of necessity.
Mr.. Miller has instituted legal proceedings
against two life insurance companies, kno 1n.
the one as the Great Western, the other as
the Farmers and Mechanics. These compa-
nies we're of no great Importance in them
selves; both are among the youngest, the
smallest, and the least successful of their
class. Their failure, in itself, raises no pre-
sumption whatever that any of the large,
welLknown companies of old standing are
weak at any point. Still less does it give
any reason for distrusting the business in
general, when the previous history of these
two companies is known.
The Farmers and Mechanics Life Insur-
ance Company was founded in 1869, as the
successor to the Manhattan Cooperative Re-
lief Association. 1t was organized and con-
Quoted by the managers of that association,
and was for most of its short life conducted
on the same principles; that is to say, it in-
Cured obligations without any reference
whatever to the scientific laws of life assur-
ance, and in return for the contributions of
''co.operative' members. It's business was
very small its expenses enormous, and it
never succeeded in obtaining public conf
dence
The Great Western Life Insurance Company
was organized at the beginning of the year
1866, by the officers and directors of the late
Goodhue Fire Insurance Company. That COM
pany had impaired its capital by its manage
ment, and had been required by the State Tu-
surance Department either to make its capital
good or to reinsure its risks. Not being able
to make it good, it reinsured its risks with
other companies and, its capital being re-
duced to $115, 200, this was taken by the same
directors and officers, with the consent of the
stockholders, and put into ga life business. :"
These gentlemen had had their previous ex-
perience in fire insurance, and may be sup
posed to have been less familiar with the prin-
ciples of life assurance. Certainly their fail
ure has been disastrous one.
On discovering that life assurance CON-
pany is not strong enough to make its busi-
ness safe, the State Department has its choice
of two modes of procedure. 1t may either
bring the company into court, and have re-
ceiver appointed, or it may require the COM
pany to reinsure all its risks with some ap-
proved company, and retire from business.
In the former case the assets of the company
are not unlikely to be seriously reduced by
the legal fees and costs incurred; and, in
some conspicuous instances of the kind, large
sums have disappeared almost magicslly.
Certainly policy-holders in general are not
likely to have much confidence that theil
trust will be managed with rigid economy fol
their benefit, when in the hands of our New
York courts.
On the other hand, if the superintendent
requires the company to reinsure its policies
it must, for the purpose, not only use all the
money it has in hand, but assess its stock
holders further sum, if necessary, even to
the full amount of their stock 1t appears
from the published statement of the two
companies now in the hands of receivers
that they would both have been able thus tc
reinsure their policies with any of the best
companies in this city, although not able
safely to continue business with their own
extravagant outlay; and that only one oi
them would have had to assess its stockhold
ers, and that one but moderately.
Under these circumstances, there should
have been some very strong reason, unknown
to the public, to justify the superintendent in
dragging these companies into the courts,
and subjecting the funds of the people now
in their hands to the danger of loss and waste
in the tedious processes of law; as well as in
shocking the public confidence in the life in
surance business in general, by proclsimint
before the world as failure the weakness o.
these companies, which might, it appears, b.
so managed as to involve no loss whatever
except to the stockholders of the companie
themselves.
THE WEST AND PROTECTION.