The Cincinnati daily star. [volume] ([Cincinnati, Ohio]) 1875-1880, 1877-03-05

A. f.. III RV Ely
of Ohio Insurance De-
partment.
COLUMBUS, ohio, Feb. 1b, 1877.

L
DEPARTMENT - Sir: In performing the
duties assigned me, in conjunction
| with yourself and Col. Ewing, in the
examination of the condition and affairs
OF the Union Central Life Insurance
| Company OF Cincinnati, 1 began work
| in the Company's Office January 10 and
continued Until February 10, in the lol-
lowing order:
/. collated the department. valuation
register with the general Office register
of the Company's policies, reading the
entire list, cancellations and all, and
had the department books again DOM
pared with the Company's valuation
record. These two collations elimin-
ated all errors-a dozen or so-in data
for valuation, or in number and amounts
of policies and insurance in force.
| 2 I examined the Cancelled policies
issued by the Home Mutual and Gin
cinnati Mutual Companies, on file In the
Union CentraPs office, to ascertain the
terms of non-iorfeiture they contained, +,
and also the Cancelled Union Central
policies and blank forms, to ascertain
the terms OF non-forteiIure, if any,
granted by that Company in policies is
sued by 1t In substitution OF Home and
| Cincinnati Mutual contracts. l found
| that all but two or three OF the Home
|
OF Cincinnati MutuaPs under number
2040, were without any non.forfeiture
or commutation clause, and that the
Union Central policies issued in lieu OF
numbers below those named, except for
limited payment life, and endowment
contracts, were similarly wholly for
| leitable. except in q few cases where
the Union Central policy contained a
surrender clause covering payments
made to that Company, but none tor the
pay yments made to the Home or Cincin-
natl Mutual Companies. l also ascer-
tanned that Home Mutual and Cincin-
natl Mutual policies of higher numbers
/ than 2,460 and 2,04O,respectively, had in
nearly all cases some non-forieiting pro-
vision. / therefore decided to value The
outstanding policies Of the Union Cen
trail as follows:
| a. Original issues from the office
data, per register.
| b. Home and Cincinnati Mutual
transfers upon limited payment lite, and
all endowment forms of whatever num-
Der, and all whole lite policies of higher
numbers that 2,480 and 2,04O, respect
lively, from the dates Of their original
issue, including policies brought in
from the Western Mutual and OHIO Life
| Companies, as far back as 1851 to 1851.
| c. All other reinsurance whole life
| policies having no Communication or sur
render value clause, brought in from
| the Home and Cincinnati Mutual Com
panies, under the numbers given, from
| the dates of the Union Central issue;
prOUtded, that the remainder Of the pre-
mum receivable, af er deducting twen-
ty per cent. margin for expenses,
equaled the net premium for the ad-
| Vanced age.
d. In cases Of deficiency of net pre-
mum, L made q special reserve OF the
present value of the difference.
am fully satisfied that ample justice
has been done all patrons OF the Com
pany by the application OF these rules.
| 8. Next, l examined the cancellations
for the latter part of 1876, and took out
a list Of policies having commutation
clauses with various periods OF grace
| for the acceptance thereof by the in
sured; and wherever the grace days ran
beyond January l, 1877, L computed the
reserve for the commuted policy as
| special liability.
A. looked into the matter of defective
| risks-the assertion having been made
that the Company made specially OF
insuring impaired lives, or 'rating up"
premiums to higher tnan the real ages Of
| the insured, while reservihg only upon
net premium due to actual age. There
have been issued tifty-one policies on
lives not uninsurable, but in cases where
the application disclosed some features
not sufficient for absolute rejection, but
which required higher than the ordin-
airy premium. OF these, twenty three
have terminated. Twenty eight are in
force, ali in the first policy year. 1
| charged out, as special reserve, the diff
ference between the values for the
| actual and "Office ages" this, however,
was in accordance with the Office prac-
| tlce.
| 5. The matter of premiums paid in ad-
vance then received attention. The
| company makes loans upon real estate,
preferably in all cases 10 its patrons.
| The requirement. is, that the loan shall
be not over one-halt the value of the
realty offered, exclusive of improve
ments. They then require that a policy
of insurance, never less than twice the
amount of the loan, shall be taken out,
aud that all initiated premium covering
the risk for five years shall be paid In
| advance. This premium is made equal
to the present value of five lull annual
payments, discounted at eight or ten
per cent, and is sometimes paid in cash,
or sometimes included in the mortgage
note In addition to the loan, in which
cases an assignment of the policy is
taken ior additional security. II death
ensues within five years, the mortgage
note becomes due, and is paid out OF
the proceeds of the policy. There is no
contingent liability beyond the net
premiums, on account Of the initial
premium paid; that is, no part of it is
returnable in case Of the death Of the
insured within the five years. The true
method of valuation is, therefore, to de
duct from the single premium for the in
surance the present value of the future
premiums, or the product OF the mel
annual premium by the present value OF
an annuity of one dollar, deferred to the
end of The period over which the initial
premium extends. applied this rule,
setting apart, however, as special re-
serve, $3S,643, the excess Of the total re-
serve OH This class OF policies over Tue
reserve extended on the register for The
annual premiums already earned.
6. Next, L assisted Col. Ewing IL
checking off the numbers of policies
HAVING gross premiums in course of col
lection, 10 see that none were reported
Outstanding on Cancelled policies.
| t. The deferred premiums l took of
in person-reading the office registel
a.. e a.. F,NS,a a., .