The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1884-01-05

i'm Defence of Eis Course IN the HEassa-
chuseffs LegisIature-Hc Makes a Fresh
Attack ON the Union Mutual Life and
Attempts to vindicate Els Action Con-
corning Es-A RejOinder by President
Dewitt.
Insurance Commissioner Tarbox of Massa-
chusetts has made special report to the legis-
iature Of the State reviewing his course and
work in office and making various suggestions.
Concerning the Union Mutual Life Insurance
Company of this State he speaks as follows:
The exclusion of this company from the
State has provoked much and various COM
ment For that, and the further reason that
an important question of the power and proper
exercise OF the power of this department. was
involved in the transaction, l report the Cir
cumstances and inducements of my action.
First, as to the reasons for my attempt to
determine by an examination the condition of
the company's affairs Its reputation, as
borne to me by report, was not honorable.
Representations were made to me of alleged
methods in the conduct of it's relations with
the public and its policy-holders, which, if
true, constituted a scandal to honest in
surance and a public injury. Frequent re-
quests, oral and written, were made to the de-
partment bs policy-holders and others for in
formation OF its affairs, accompanied by ex-
pressions of distrust. A reference to its his
tory, written by itself in its annual statements,
did not inspire confidence, but, unexplained,
reputed surplus was 81 pa, 158. On Dec. 81,
1876, that surplus was reduced to SOL ,565.
This shrinkage of over million dollars in
single year was not due to extraordinary ex-
pendlture or Increased liability, for the excess
OF disbursements within the year over income,
was but $105,557 and the increase Cf liabili-
ties but S80,562. On Dec, 81, 1877, its reported
surplus was $37 ,351. For 1876 it's real estate
was returned at ''cost value, 1856, 1893 For
1877 the return is appraised value of real
estate VI, 227 1881. Upon what basis, of &C.
tual valuation, if any, and how and BY whom
made, the latter return may be justified, had
and have no information.
Standing as the company then did, if not
really lnsovent, confessedly close. to that peril,
the temptation was strenuous to save it by a
false representation of its assets. For 1882 the
statement is 'cost value of real estate $685.
I'LL" Its real estate as thus valued comprises
nearly third of its en9ire assets, o greatly
larger proportion OF such assets than any other
life company holds. This real estate was &C
CURED by foreclosure of mortgages taken for
inJudicious loans. Its costs to the company,
which includes the amount of original loans.
interest, charges of foreclosure and other ex-
penditure, is not the proper measure of its
present value; upon its own exhibit the COM
pany has smaller relative surplus than any
other lie company, save one, doing business
In Massachusetts. If its valuation Of its real
estate be nineteen per cent in excess of a true
value, 1t is insolvent by Massachusetts laws,
allowing the full credit 1T claims for other as
sets. From 1875 to 1883, the company's assets
decreased from So, 1853, 664 to &c. 26067S; its an
nual premium income from 81 ,8764l1 to 1872
$40; the number of Its policies from 22.122 to
1000. Within that period 5762 of its policies
terminated BY surrender, and 1856 by lapse,
an extraordinary record as compared with 9TH
er companies of its class Meanwhile the SAL
ary OF us president was increased from $1,000 70
$l9,0OU, and Its annual salary exnenses fron,
Sl9,Ooo to $4,000; while the ratio of its ex-
pense Ior agents was largely in excess of the
ratio OF such expense by like companies,
which show more satisfactory apparent results.
An order of the legislature of 1881 requested
OF the life companies statements of the salar les
and emoluments of their officers. All complied
except the Union Mutual, which refused Fin
ally, and under apprehension of the conse-
quences OF refusal, which it was not then rea-
dy to brave. 1t furnished the information: and
It's statement, in the usual compensation paid
us saiaried manager disclosed the motive Of its
cotumacy to the legislative order The pecul-
lar circumstances attendant upon the removal
OF the company's principal office from
Boston to Portland, and the incidental
legislating out of Office of number of
Its directors, have induced the suspicion that
such actien was schemed to prevent critical
investigation of its affairs. These were chief
OF the considerations which persuaded me Of
my duty, under the authority of the law to
discover and verify the facts, that the public
might have assurance and the company have
justice. MY concern was not confined to the
question OF solvency. The ascertainment that
a company is legally solvent at date of exami-
nation, does not discharge the function of a
public supervisor of Insurance. To discover
the corpse, after murder done, is well; to
prevent the murder is better A proper in
vestigation embraces an inquiry whether cor
ditions exist, which, If allowed to remain. will
lmperil future solvency. 1t is the company's
ability to fulfill its obligation in the future
when bis claim falls due, which most ccaaiasssrns
me poncy holder. FurthermeErSS; svery well
based mutual life insuraYce comnanv inavita-
bly, accumuates finds beyond its legal reserve
a.s asses Lay be deyisible into two funds. The
1sssolVe, which it is required by law to have for
the performance of its policy contracts, and
the surplus, which is the accumulation above
the reserve. This surplus is the property of
the policy holders. Ordinarily, in the adnin-
istration of company, portion of the sur
plus is held in investment to protect the re-
serve, aud the rest is distributed in dividends
In cash, or applied to purchase of additional
insurance or reduction of premium payments
at the election OF the policy holders, of all
these funds the financial officers are trustees.
with equal fduciary obligation to all. To mis-
apply, embeZzle or otherwise BY dishonest or
lmprovident administration to spoil the sur
plus works as positive wrong to policy-hold-
ers as wnen the unfaithful administration af-
fects the reserve, for it robs the policy-holdsr
OF his just dividends, which reduce the cost
OF his insurance, and iKperils the reserve by
the withdrawal of a natural support 1t re-
suits that incapable and dishonest managers
may abuse their trust, to the great injury of
policy-holders, and yet not render the compa-
ny, in contemplation OF law, insolyent. From
abuses and injuries of 9his character. the pol-
cy holders are entitled to such protection as
the vigilance of official supervision can pro-
vide, and in harmony with these yiaSs-aA (
examination proposed Of the rsS' ..ssSN
contemplated an .
Telatlye sezye<G .grIEy of its
80 --'''' u avs n"an-
- 20 the propriety of the proceed
49, commissioner ia relation to the conn