New-York tribune., 1872-01-30
THE tRICAGO CU-OPFRATIGE FIRE LNSC-
RINLE COMPANIES.


THEIR STOCKHOLDERS AND POLICf-HOLDEJ'S'
To the eEdttor OF RE TriGunG
SrR. "Wbat will become of the stockholders
of these Cooperative Fire Insurance Companies III Chi
caqof They have only paid ia g per cent npoh tleir
stock aud are liable under the aSs OF Illinois for the
remaining 20 per cent" These w'rt the words used by
tbc vice president of a wellknoWn hfo INSURANCE.
comuony OF New-York the time the failure OF al the
Chicago companies was reported during the progress OF
the great fire in that city The high sdnrce from which
mi. inquiry came would of Itself stamp the question
t ,nnorauce had subSeq mont events happened 10
brine the query home with practical force, mol ohy 10
the stock khOLlcrs, hut also to the poHcy -hold'r'
ia those companies. IL calls the earnest attehuoD
of the insured and nsuring public 10 THIS practich dein'
onstr,tion Of the advantages disadvantages OF tis
new systein Of insurance 10 both stockholders ana
poiryholder. in companies which have not only
CENTRAL office aud nominal head, hut have aIso stock
holders and branch Offices many u te Eastern cities,
and in nearly all thoitcs and towns Of the Middle ana
Western states and Territories, or thes" eompahi's'
there are the Republic, State. Lamar, Great western
and Knckerbocker Of Chicago, .nd tho American Cen
tl ol ST. Louis. Their assets, 10 cash ana securities as
oupcar4 by their latest statements, about $Ooo0C0
This was swep away hy the Ore, with mnch more for
which these companies arc liable. Ihts s3eo0O, now
c,er only represents 70 per ceut, or onc-ifth of
their LEGALLY availlhie assets, The remaining "a
pcr cent or touI-hfhs. ning 10 sl2VoU'O',
h,ug y their charter and by LAWS siptc 10 call Wle
ever the 20 per cent and It's a"6omnlht:d surplus
.hou have been exhausted 81 os 10 impair IN" lnhlnu
Gosh cnnItal This contingency OccuIed Ia the gteat ire
Tho sl2 100000 contingent capital was more thah tnu
ient to meet al losses 10y that lire. and MI other claim
and Ieave the capals of these c0npanie, unlDparcd
,,i,h which 10 continue business. The companies held
ont tbis 50 per cOnting Mt catal 10 the n'nhI
public as fonrold guarantee 81 Indemnify III any poS@I-
bic emergency while stockholders were indn'ed 10 taAo
stocL upou the that ti- 20 per cent Houd
never bo called for and that in addition to 10 pes cent
dividends upon the ~ pr cent paid, they
would have the pleasure Of seeing surplus accu'
mulate that would appreciate tio value Il
their stock to par within i've years. lhE
was satisfactorily demonstrated by ssdltuhy mh
napuated; statistics Ia the conhdhz ana hhhitatco
stockholders. What s the RESULT lmiueditteD 0Iit
the fire. the Republic Great western. and Aio"ilcnn
Central announced that tboy would cell III the unpaid
40 per cent pay their Losses promptly, ana Continue
business Tho stockholders ~ the Republic, however,
refused pay the ~ per cent or any PoIeIoh OF " ~
Their cash capital Of NJ per cent wa. olIy sl,2~eN
which added 10 the ~ per ceur caIod Woua nahe 1ny
sOCaOOO while their losses wore l~9riy s,ooON The
Directors were thus compeled 70 syeeae roui tLelr
demand and announced thai thc! Houl pay 20 cents on
the dollar This the pocyholders refused to accept
and while the State Auditor has gone IN and taken pos
session OF the cOInpanys "icc ana assets ana COM
menccd closing up iis Business tie pocy holders bavc
gone into the courts TO compel TIC socshodera 10 pay
The Grat Western had recently commenced businoss
and although possessed OF the requisite capital te
conuly not only with the Illinois but alno the NcwI Ork
law had fallen into such dlTepnte OF bonie account
of The reckless aud dishonest MANI cement OF its officers
that it had little at rsk ia Chicago ~ the time of the rs
consequently waa able to pay s light losses with IL
assets hand, aud only called 20 per which t is
now collecting, white the stock cannot lie sold nc 2.
cents tho dollar paid in cash Both stockholders
and policy holders In the American Central mora
fortunate. The Company did little business in Chicago,
aud very conservative in II, manpgoLleat
aud was able 10 settle its losses promptly witleu'
embarrassment or injury 70 is hasne;.. Tho cthe,
companies were ~ hOpessly involved that they vent
down under the mighty waNo of disaster WITHOUT
struggle. 49,
The OF policy holders In th.se latter companies
Will no doubt be sonicw nat influenced BY ibe result 0!
the action OF those who have eommeneed SUITS again,
the stockholders oi the RepubIc, aud tsat WIZ oe n'o
test case but h far NOR pr2baDle IN leW VI t
fact that the law Is the side of the policy ai
that millions are uyolved, thu endless ma nni%f-
mate litigation win MI the - Of luols for years
and extend 10 every state ppd pcirtorJ m whlnh hse
companies had stookboiiert. 10 s Wow such stocks
have not only become utterly worthless but are danger
Gus papers IN tho hands OF rcspDislblc uwntrs.
Whatever tho upon those cooperative companies
which suvyiy the SHOCK u ~ almost certain that
moro will he formed nt present uhlnss thttr Operations
are directed 10 new leds; who tho matter kayes .
dye dYub In the nd " tho puDic not spy ~ ~ tho