Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1874-11-14

mentioned, the condition of the institn-
tons they risk their money in.
Mr.. MALTBIE, THE SPECTATOR, AND TIE
NEW JERSEY COMPANIES.
Last month the Spectator undertook a
review of the New Jersey insurance
companies, classifying them as hrst-
class, second.class, and no class at ALI
damning with faint praise those which 1t
admitted to be sound, and injurine with
undeserved condemnation those which 1t
discredited. Some of the information
on which il assumed to act was alleged
to have been secured from Mr.. Maltbie,
the examiner of the Connecticut lnsur.
ance Department, who had been investi'
eating some of the affairs of the Newark
COMPANIES. The editor Of the Monitor
happens to be a citizen OF Newark,
where he is acquainted with many of its
insurance men. They number among
samples OF business intelligence, com
mercial integrity and princely wealth,
such as would be credit to any city III
the United States, and we feel particu'
larly thankful that we happen, at this
particular iuncture TO be where we can
publicly. and we trust efficiently, rebuke
what seems 10 US superficial aud igno
rant interference with important local
interests by q subordinate from our
neighboring State; aud we accept what
ever oaium there may be in the defense
of a non-board company for the sake Of
exposing what we do not hesitate to
designate as the ignorance or malice Of
a Connecticut examiner.
Selecting the Humboldt Insurance
Company, for example, Mr.. Maltbie took
the ledger account of premiums for
twelve months, deducted the reinsur-
snces and cancellations, and assumed
the remainder as the amount of premiums
on uuexpired risks, charging 80 per cent.
of this amount as the reinsurance iabil-
ity. This he did without making any ex
animation of the risks themselves, aud
apparently without being aware that his
assumption involved two other assump
tons. both of which were necessarily
and obviously false; first, that the com
pauv had written no short risks; second,
that il had net with no losses. All the
premiums received during the twelve
months on short policies which termin-
ated by expiry and those ended by loss
were included in this ledger account,
aud the reinsurance liability charged
up, the object apparently being to break
down the company anyhow One OF the
severest tests required by practical IN
derwriters for approximating the rein
suranee liability is 40 per cent. OF the
gross premiums received. Even this
criterion would have given a smaller
figure than toe one obtained by Mr..
Maltbie's method; but subsequently 90
examiner from Ohio, under the instruc-
tons of that veteran underwater. Mr..
Church, spent ten days with the Hum
bouldt. during which time he made a
seriatim schedule of all existing policies,
with the premiums thereon, thus furnish
ing an absolutely correct basis for ce-
terming the insurance reserve, and
proving Mr.. Maltbie's assumption to be
twenty-nine per cent out OF the way,
and the company not to DE sufficiently
impaired to require its withdrawal either
from Connecticut or New York. The reck-
lessness of Mr.. Maltbie's examination
ought to startle the commissioners who
accept them as accurate, and it will not
add to the comfort of those who may
henceforth be subjected to his inquisi
tons to know that, so far as the Newark
examinations were concerned, the New
York Department took his work as the
basis Of its own. 1t matters not whether
rhe blunder of an insurance commission
er be ten dollars or ten millions. He
has no right to make any mistake at all,
even when working upon correct basis;
aud specially he has no right to adopt
a false basis, and work out from that
results disastrous to the companies.
Such practices. if continued and widely
extended. will bring into irretrievable
contempt the insurance departments of
the several States.