Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1882-04-12
A New Departure Indeed.

An announcement is made by one OF the Oldest
and largest American life insurance companies
the Connecticut Mutual, OF Hartford-which
will not fail to challenge attention. Coming as
1t does, from company OF unqnestionabe solv-
ency, abundant resources, honorable record and
peculiarly careful management, this programme
of a radical new departure in the conduct Of life
insurance is entitled both to respect because of
its source, and TO candid examination, because
OF its important and far.reachng results It Ia
nothing less than a decision on the part OF this
second largest life company In the country to base
its reserves las regards future contracts) upon
the assumption Of three per cent interest instead OF
four or four and half per cent as the other Am
erican companies now assume under the legal pro-
visions of the several states The existing contracts
OF the Connecticut Mutual are based upon a four
per cent rate of interest Some OF these have been
running over thirty-five years, and thousands OF
them must so run for many years TO come. But
now there has come change which opens be-
fore the minds OF conservative financiers pos
sible prospect OF permanently low rates OF in
terest; and the managers OF this always con-
sentative company, after due consideration OF
the gravamen of the situation, step boldly
out OF line and take the bull by the horns They
intend to be on the safe side whatever may hap
pen.
This is no mere managerial trick or trap OF
the new plan order; but 1t Is the most serious
and far-reaching step ever taken by an American
life company. II means moreover, the making
life insurance 40 absolutely safe that question
can be raised; and this too, without making 1t 30
costly Ms to be out Of anybodys reach. II Is con-
servatism of a radical type, II we may say so-a
purely progressive managerial move which, even
though it be not a necessity, must carry convc-
ton OF its soundness and its honesty of purpose.
Opinions may differ TO what the rate OF interest
is TO be in the future-say forty or fifty years
hence but there can be but one opinion touching
the perfect safety OF assuming three per cent as
certain to be earned on the kind of securities In
which life insurance funds should be invested
The four per cent assumption has heretofore sat
iafa b.Ady nd auau fha fnftr "A hal
cent basis still has the full faith of many managers
and law makers. But President Greene does not
intend to be caught mapping and 40, TO hedge
against even remote contingency, he has proposed
this step 70 his board OF directors, and with their
sanction 1t IL now promulgated.
All this is boldly, brayely done. While we are
not OF those who believe the rate OF interest in
this country Is in permanent decline, we must
express our admiration Of the courage which Ia
exhibited by this pioneer OF a new departure in
life insurance. The details OF its working as
also certain collateral new features OF contract
and practice, we must let the company set forth
In Its own way-only saying just here that the
change proposed, We are assured, will not tend
TO increase the present rates OF premium on the
average but will merely make necessary some
slight readjustment OF them To meet the actual
conditions demonstrated by a full experience
and upon more conservative assumption as
to interest Let 1t be remembered, moreover
that II Is a company with thirtysix years success
full experience, and with S60,0OO,O00 of assets,
whose excessive conservatism Ia thus compelling
public attention. As we have said, 1t is no new
plaD, much less Ia II an experiment. IL Is a
volume from the library Of experience itself, and
such In to be received as a report of progress,
even II any shall feel like questioning the wis
dom OF the necessity OF so startling q stride
And, any way, 1t Ia entirely within the scope OF
the companys powers and rights to thus in
crease the security Of its members, II its mana
gers 80 incline.-N Y. Daily Commercial Bulletin,
AprR3.