, 1877-03-10
INSURANCE MANAGEMENT.
Some Interesting Testimony ia HeN
York Investigations. y. iinmnona'
af Cincinnati.

go.,a U.teres,iug Testimony in New
yo-L UuyeSffyetiOn-S. n. Hammond,
of Cincinnati.
In the Continental Life examination, late
T. n Hammond, of Cincinnati. known
among the insurance men as 0 professional
4" xrecksr." gave testimony that excited
much surprise and interest. He said in part:
"I was engaged by L. ". Frost, IN May,
1874, to buy policies for the company and
went to Nebraska, Kansas, California, and
sttsrxard, to ihe Southern States. Under
what Is known as the Continental plan of in
snrs,ce- a certain reserve is left with the In
snr.nos depsrtments of the States in which
the company does business. This reserve Is
increased in proportion TO the amount OF the
risks taken in the States. The policies were
for thirty years, and. after that, were TO be
mil and void, but the loading of this class
of policies was so high from l25 to 1881. per
cent J that they came up almost as high as
the life premiums, on which the loading
las only from % to 80 per cent. By load
iny mean the amount allowed for expen-
ses. etc The plan OF insurance Is
A swISppE ON TIE POIICY-HOIDERs-
Frost was with me in Californis from Sept,
1874, to February, 1873 ran off from
500 900 TO 5000. 900 of the CaiifOrnis reserve
offered for the old policy policy ON the
Continental plan, bat afterward purchased
the policy outright. and gave draft on
the company for the money 1 paid so mach
10 cash and SO much in premiums in another
ompeuy, but the amount never went beyond
so per cent. of the reserve, which l could
run off by purchasing the policy. and this
30 per cent. also COVERED my expenses
ran off in Nebraska about T25 900 OF thirty
thousand dollars of the reserve.
IRAN OFF, BETWEEN S2,500,OO0 AND
S3,00U. 900
in al the States went to-, and Understood
! from, Frost that was to come back and do
The same business for him in New York and
the East generally. The contract made TO
do this work wes signed by Frost as presi-
dent of the Continental company. reinsur-
ed about $23, 900 with the Southern Life In
surance company. This company failed a
few months afterward. 1 did not think this
company was very good, but my instructions
frum Mr. Frost were TO reInsure III the
5 uthern Life, and reiusured everybody in
this company that was
BIG ENOUGH FOOL TO 2E REINsURED
| in it Nj Frost had . little book, when we
were in California, in which he calculated
how much he made every day, and one day
he told me that he made $4,000 or $1,000 that
daT for the company. / asked him If the
company was very large He said no; that
it was composed OF himself. and his associates.
I had a salary fist a: the rate of $500 per
annum. tbs lasted only ten days. when 1
wes cut down TO 5000. and 10 per cent. on
the amount of the reserve that " ran off "
Ny salary and commission IN California
alone amounted to $26, 900.
TIE WAY MANAGED WAS THIS
I would go to policy holder whom wanted
TO iniimidaic and tell him that the COntinen.
tai was utterly bankrupt, and work on his
fears until Is would be willing to sell out his
policy 10 me on nv own terms, which in no
case amounted to the amount of the reserve
to be run OF, including my expenses
knew perfectly that, according to the lav of
the State of New York, 8 married woman
could not dispose of her policy. but l gener-
ally got the woman in whose favor the policy
was made to write her name across the face
Of it. This was according TO
THE WRITTEN INSTRUCTION FROM FRosT.
Nearly all the policies were made out III
favor of married women, but had nothing
TO do with this law, because I was only the
agent of Mr.. Frost. My first agreement with
Mr. Frost to purchase policies was in July.
1874. Before that I was the Compauys
General Agent at Cincinnati. knew, at
that time, that the Company was pretending
to be perfectly solvent bese, end wns inviting
new risks. but Mr. Frost said they had Ger
tain amounts to meet at home at future
| time. and, unless the liabilities Of the Com
pany were materially lessened.
THEY WOULD BE RUINED.
I think this plan was pursued by most Of
the New York companies in regard to their
Southern policy-holders. mr. Frost's plans
were, as / understood theE; 10 continue the
wrecking process. until there was not much