New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1876-11-11
wATERED INSURANCE INVESTMENTS.

THE ASSETS OF THE CONTINENTAI->HhiNhAGE OF
INCOME FROM LtTsFD, PURCHASLr, AND SUR
RENDERED POLICIEs-TIlE BLIND MAN Al Al
BANY.
To the Editor Of The tribune
SIR: While people have been trying to
soueeze lie water out of railway stocks they are sud
denly reminded that there fearful amount OF water
or wor,c-in some Of the insurance Investments. Inc
Continental having been alone severely by the Iusur
spce Department. comes grief mainly because there
no ptobabty that the next superintendent will he blind
in that eve Its difficulties commonly attributed I"
the panic and the consequent prosrann Of business
but companies like Equitable the Mutual do n"'
appear 10 have been losing business since the "lc O
doubleday the value of assets has materially diminished
because Of the decline in prices OF real estate when hs
been so large in many 70 make ii Impossible 1"
realize without severe loss upon mortgage loans
which were deemed euiuruty judic"us few years arc"
BAIT that is not the main trouble whit Continental lis
real estate stn returned and admitted as assets at
valuation much above cost. Its mortgage loans are al
mted 1T their nominal amount. The Immediate din
Guilty Is one which al. several other companies when
have not vet failed as well the Continental An cs-
sepal part Of the assets Of the company consisted of
claims against pocy-hodcrs, when became worthless az
they lost confidence in IT, and surrendered their policies
or allowed them lapse. Put the same decline Of con
fdence the income of The company to SHRINK ana
at the same tune involved 1t in heavy expenditure on ac
count Of surrendered lascd purchased policies The
expenditure on this account over Hl,OOoOOO, or
about 10 per cent Of the entire income, in lS74 Tho
number Of policies dropped within these two years was
more than half OF the whole number outstanding at The
end of 1873. Hence of neceSsty, the income rapidly de-
clned. Ordinary expenses not CENTRALIZED SaIafl
and commissions did not shrink But The same comI"n
which added 81 per cent Of its entire income to It's t.
serve in SD returned expenditures exceeding liz cn
income hv uer cent i'm 1873. II is unnecessary 10 "t
that the Insurance Department dld nothing aoOu' 10 "
Il does nothing in other eases equally bad.
In view % this rapid surrender or Abandonment OF l"
ices the premium notcS and deferred pay m'nis became
a particularly untrustw0Ttlv part OF as els but inc
constituted abOut a cent of the entire assets OF "
company. The obvious moral is that company whcu
has larre "a proportion OF Its assets IL TINS ~" Is a
10 drop into bankruptcy soon a. lts business he
decline Snch cOnpancS then al the mercy OF the
knavish backmailers, who 90 about LOOKING iof s'lr
concerns weak enough 10 be bcd Companies III INA
predic9ment cannot afford pay every scamp al t"t
ne may ask for "keepiug still" But tie' Gan sun -
afford 10 allow the public confidence to he Destroyed i
a few facts about their condition. "tejWe, the deNi
and the deep sea-" they choose one or the o,ht p 'd
nv into dcpp in any case II Ire 'ItlN
are kuayish they put bogus assets maze Dig pdl"'
and priytfeIy negotiate reinsurance on terms td9
ami 10 themselves They have quite tine same fashion a.
tbe anarnr Of the coal roads, too; they can deny WIN
infinite nctiOn that there j. any thE tc ha''cI' even
while thrv are getting ready To scutte the SHIP go
There are other companies, stl permit cd 10y the mn
man AT Albany to 20 as n they were solvent, WIG
need .1uyinaton quite much as dld The tonuutua.
Tev are prctty sure % get b., when G. minis nNf rs
app1in cd who has no relations with DeiOc' a''t i
insll canvass Policy.
helc-YOrk, oct. 80, 1876.