The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1885-05-19
AN ENGLISH OPINION.
''Fifteen Pence for a Twelve-Penny
Article"
Connecticut Mutual Life Insurance Company
of Hartford.

connecticut AIutual Life Insurance Company,
of Hartford.
From the Review. London. April 90. 1885.
On June Ia, 1882, we published an article on
this company under the title of "A New Ameri-
can Departure, in which we ventured to suggest
that the recent conversion of the managers to
the necessity of a 3 per cent. basis for their val
uations was one which read, at first sight, as
being an uncommonly prudent step to take, but
yet that it was possible that there were two
sides to the question. It undoubtedly appeared
a most far-sighted mane1vre to adopt the 3 per
cent. basis, because it looked as il the Connect
cut Mutual was anticipating in the not remote
future a possibility of being unable to get more
than 3 per cent. interest on its investments; and
from this point of view the proposed alteration
in the system of valuation looked both
sagacious and prudent. 1t is true that
this hardly harmnnized with tho principle
upon which the company had been making it's
Investments. principally out West, when consid-
erably over 3 per cent. was aimed at, with the
result OF a corresponding diminution in security.
we submitted at the time, however, with all
Difference to the experts who then advised the
Connecticut, that it was impossible to assume
that for the next fifty years a rate OF 4 per cent.
was unobtainable on investments in the United
States. We further ventured to state that no
financial authority in the United States would
express an opposite opinion to that then enun-
ciated by ourselves Yet there was a point raised
which the policy Of the managers of the Con-
necticut Mutual made ineligible. 1t was per-
fectiy certain that the policy-holders in the
odice would find their bonuses cut down very
considerably indeed, and we expressed an
opinion that the persons who took out new life
policies in the Connecticut Mutual would be per-
sons Of exceptionally happy and contented dis
positions, as they would have to be contented
with getting a less amount back for their money
than they wonld get il most American life
ohlces. Yet we more than indicated that the
new pollcy-holders might be only too happy to
consider that they were helping to make up the
deficits caused by the past financial administra-
ton of this office; and, further, that perhaps
when these deficits were made up, some large
and excessive reserves might be accumulated for
the benefit of their heirs, administrators and as
signs. But it was doubtful whether the Amer
lean people would care to pay fifteen pence for
twelve pennyworth of insurance.; and we, in con-
clusion, announced that we would await the de-
velopment OF this new phase of the business, and
see what its results might be on the progress of
the institution.
Of course we are quite prepared to admit that
it is far safer to wait until a thing has actually
come off, before one begins to ~prophesy about
it; but, on the other hand, there are some things
which, in the colloquial language of some of our
modern authors, are dead sure" One of the
surest things that we have ever heard of UP to
that date was, that the new business of the
Connecticut Mutual was most alphabetically to
be sacrificed by the adoption of this most re-
markable step backwards. We think, however,
that it is not at all improbable that the basis Of
valuation of the Connecticut Mutual might
have to be reduced considerably below 3 per
cent. in order to insure the solvency of
the Office, for it is now apparent that
the company has been compelled to realize, and
in a most improbable manner, upon a large
proportion of it's investments. A company
ruhSn v,n ~A4-1x~ "a 600 - 4H1Nl- - ---I
estate, upon which it is calculated that not more
than q per cent. of the amount invested can be
realized every year, must necessarily make up
the deficiency from some other source, and what
other source can be SO ready to hand as the pre-
miums of new policy holders? These financial
lambs are to be brought into the fold by the
prospects held out to them in increase of solven-
cy of the Connecticut Mutual. to be brought
about by the adoption of such an excessively
safe basis Of valuation as that of 3 per
cent. That the new policy-holders are
conspicuous by their absence to-day is
attributable to that feature of human nature
which objects, as we before observed, to pay if
teen pence for a twelvepenny article. The pub
lie go elsewhere for their assurances, and the
managers of the Connecticut Mutual are wiring
ing their hands over their unrealizable assets,
and their 3-per cent. system Of valuation. Why,
under these circumstances the Connecticut Mu.
tual-a company which is rapidly slipping down
the hill, which fails to obtain any appreciate
amount of new business, which is known to be
loaded with a vast quantity Of unrealizable as
sets-should make up its mind to 'let out" freely
at a number of prosperous New York life Offices.
is one of those things which it is impossible to
understand. The only ineligible explanation
is, that Colonel Green anticipated that, in the
inevitable rejoinder. his company would obtain
a certain amount of cheap advertising, and SO
long as his company was talked about somehow,
he was practically Indifferent to what was
thought of it.
nICN