The New York herald., 1872-12-07


GEORGE 3. COE.
OPINIONS OF DISTINGUISHED ACTUARIEs ON
THE COURSE OF THE MUTUAL. LIFE IN
SURANCE COMPANY.
NEW YORK, Dec. Z, 1872
Messrs. EL.zUR WRIGHT. SHEPPARD HOMANs and d,
PARKS FACKLER. Consulting Actuaries.
GENTLExEN-As the public mind Ia agitated upofi
che subject Of the reduction OF rates t M ne insur.
a"S9 W '"' -.u.,,a Life Insurance Company Of this
city, we respectfully request from you your views
upon the circular issued by that company, and
which we enclose herewith.
Your long connection with life insurance. and
your character as trusted experts in the business
together with the fact that Actuaries you occupy
positions Independent OF individual companies
will give your views great weight with the public
and with US. We are. gentlemen, your obedent
servants
William II. Beers, Vice President New York Life
Insurance Company; John f. De Witt, President
United states Life; Lewis @. Grover, President Of
the Mutual Benefit Life Insurance Company; N. D.
Morgan, President North America Life Insurance
Company: II. B. Hyde. Vice President Equitable
Life Assurance Society; Robert L. Case, President
Security Life Insurance and Annuity Company; L.
w. Frost Acting President Continental Life Insur-
ance Company; Henry Stokes, President Manhattan
Life Insurance Company; g. Stanton, President
Knickerbocker Life Insurance Company; Andrew
Gill. President Guardian Life; james A. Taber.
Secretary Merchants Life; Fred. Schwendler, Vice
President Germania Life Insurance Company;
George b. Satteree, President Eclectic Life Insur-
ance Company; +. E. Morse, Vice President Com
monwealth Lille Insurance Company; James H.
rockingham. President World Mutual Life Insur-
nhorln
Excelsior life Insurance Company; Edward Jones,
President OF the National Life Insurance Company;
c. W. A. Bouck, President Brooklyn Lie Insurance
Company.
NEW YORK. Dec. o, 1872.
GENTLEMEN-We are in receipt Of your favor OF
the 4th inst, asking opinions In regard to the
reduction OF premiums to be charged for life in
surances by the Mutual Life Insurance Company
of New York, as set forth in the published letter
or its Actuary Professor Bartlett, to which at
tention is specially directed.
We have examined that circular with care; It's
precise meaning is not clear, while some OF its
statements seem inaccurate.
1t is gravely proposed to reduce the cost OF life
insurance by reducing the rates OF premium But
the Actuary of that company, OF all men, ought to
know that, in O mutual company the cost to the
insured can only be reduced by reducing the work.
ing expenses. For the premium so far as it is found
to exceed the actual cost, il returned to the In
surcd, with interest, from year to year.
Mutual rates are designedy, and certainly ought
to be, higher than the probable cost; the excess
forms the capital, the balance wheel, the perennial
reservoir, which exats contingency into certainty.
This has been most abundantly vindicated in
tue history OF the sMutuai Liie itself.
The language OF Professor Bartlett's letter Is
quite inaccurate where 1t speaks Of reducing the
margin OF the premiums from forty per cent to ten.
and may have mised many, as 1t has puzzled us. For
In only one OF the present premium columns is the
margin as high as forty per cent and in some 1t Is
only twent per cent; that only few Of the
margins reduced to the extent he mentions.
To state it accurately. all the various additions
to the net premium for expenses and cOntingen-
cies are to be reduced to ten per cent, and the
rate per thousand for an ordinary life policy on q
person aged thirty, which is now 81. 20, will then
be SIT s2 while for five-year endowment policy
the charge will be rom $50 to $l9s, the proper
tonate reduction being thus greatest where the
premium is least and the risk OF the company the
heaviest-a self-evdent error which needs no
further exposure from US.
The next section OF the Professors letter provides
for the retention OF the surplus-accruing from
these new rates-until 1t amounts to Originally
stated a. two annual premums) annual premium,
which is to be retained as margin for contingen-
ces not provided against in the lower premiums;
but this very course will make the average outlay
OF the insured for the first ten years greater than
now, and cause the company to retain on hand q
much larger surplus than 1t now does At present
the average surplus hand for each policy Is only
about forty per cent OF the annual premium, while
on the new plan 10 will In time become ut least 100
per cent.
The two following sections OF Mr.. Bartlett's letter
may be regarded necessary sequences to the one
just mentioned They are as follows:-
2. That these credits be held to be assessable to
meet any denclt that may arise rom any circun
stances whatever
3. That in case OF death the whole or the re-
versonary credit TO be paid to the heirs AZ At
present.
The fourth and ias, we would ain believe mis-
print; but We are assured to the contrary, as 1t Is
the same in all the publications, VIII
T. That existing policy holders may have the
option either to leave their policies undisturbed
and pay their old rates, receiving. Of course, their
proportional dividends and reversionary credits,
or to take out new policies with their existing
credits addea, and pay the new rates c0rresp0nd-
ing TO their then present age, provided they sub
ject themselves to q new medical EXAMINATION
and are pronounced assurable.
1t is difncut properly to characterize its terms,
and we are quite sure that intelligent present
policy holder will care to accept the second option
1t affords, as he would thereby forfeit all his share
in the present reserves except as to dividends.
AZ to the general plan, II is q virtual abandonmens
OF those cardinal principles of security and equity
upon which the claims OF the Mutual Life Insurance
Company TO the confidence of its policy haders and
OF the community have rested. II cannot be car
ried into effect without injustice to existing policy
holders and decrease I'm their security. II carried
ont at all the reduced rates anould apply not only
g..t.s IN nvio linn