The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1886-01-16

MS honor Judge Granger, Of the Supreme
Court of this State in the recent proceedings be-
fore him against one of our life companies. in
which its solvency was the question under con-
slderatlon, and where the estimates of value
made by apparently responsible and intelligent
witnesses varied often as widely as 40 per cent,
and which proceedings his Honor advised should
be abandoned that 'this matter Of the valua-
ton OF real estate is one about which parties do
differ and we'll may differ"
One has but to look at the valuation which the
public puts upon the great dividend paying rail
road properties of the country to-day, and COM
par1 IL With the prices OF year ago, to see how
estimates of the same property may be changed,
and IN this case advanced, by the estimate which
the same public puts upon the probable future
earning capacity of the property. Questions of
actual cost to reproduce actual cost of invest
ment, present earning capacity, probable future
earning capacity, development Of new and
neighboring public improvements. increase of
local industries, and thousand matters which
Will readily occur to you, and which are certain
ly ascertainable only by the eye of Omniscience,
enter into an honest estimate of real estate
values IN almost any portion of our country to-
day. This company is not in the real estate bust
ness. IL has upon its hands large, though great
ly reduced amount of real estate In its general
estimate of that branch of its assets it makes
reasonable examination of its several properties,
but upon the whole, treats the matter as one
branch of it's assets in gross. 1t would be- un-
doubtedly, possible to select here and there an
item of real estate held by the company which
would not realize at the present time, and posi-
bly, not in the immediate future, the cost at
which it stands upon the company's books; but
we are more than confident that for every item
which sale under decent circumstances would
| reveal to be worth less than the companys cost
there can be found great many others which,
under fair circumstances of sale, will realize
sufficient amount in excess of the cost to the
company to offset all deficiencies and leave
large balance to the credit of the company's real
estate account. Of course, it is not to be for
gotten, either, that in few instances where the
company cannot now realize at forced sale the
full cost of their real estate they are not obliged
to part with it at sacrifice, and whenever in
vestigation leads as to believe, as in few cases
it has, that there is no reasonable prospect of an
advance in property equal to the interest on its
cost, the managers desire in all cases, and have
so acted, to part with the property at once, and
to submit to the loss. Fortunately, these cases
have, so far, been found to be very few. There
is another class of cases in which reasonable
estimate of probabilities leads us to believe that
the property, which, if forced upon the market
would not fully compensate the company for it's
advances, will, if treated with common sense by
party abundantly able to retain it. yield more
than the company's investment in it.
Turning now from matters of theory to actual
facts and history, the company has sold, for
3d. 852 OKLA, real estate which cost it by the face
of the foreclosure DEGREES (which is the uniform
treatment by the company of the term cost of
real estatel ST. $685. 59772, yielding net profit of
1888, 1902 This property was valued by the
Insurance Commissioners in 1879 at So $780,
444 %, or 81 292 597 81 less than it realized and
$780, 153 40 less than it cost the company 1t is
also an important fact that the largest element
of this gain is derived from the sales during 1885
AS to the rest of the companys real estate, we
fully believe that it will realize it's cost and we
have strong hopes that the rate of profit will be
as large as it has been upon the portion already
sold. This item of real estate large as it is, is
from it in 1884 exceeded 4410 per cent upon its
cost; and while we cannot give complete figures
for 1855, because they are not yet at hand, it is
believed that the percentage for that year will
be even more gratifying. IF you will com
pare these results of sales and rentals
with the results obtained by the savings
banks of Connecticut, New York or Massachu-
sets, or by the insurance companies of any part
of the country we feel confident that you will
be assured beyond all reasonable ground of fear
that the Connecticut Mutual has suffered at
least as little as any other financial institution
in the United States account of its large real
estate loans. Our uniform system, as we have
said is to enter at cost value the total amount,
appears by the decree of foreclosure. This is
the method required in the returns of our own
and all companies to the several departments.
This is enough 70 say about the company's real
estate, but we ought to add that, so far as the
facts demonstrate anything, they have demon
strated this, that the hopes of the management.
expressed in all our reports to you in these late
years, as to the soundness of our real estate
have so far been much more than realized,
while the apprehensions and gloomy forebod-
ipgs expressed upon the same subject so many
times in the columns of the Insurance Monitor
have so far at least, proved to have been ILL
founded.
In regard to Mr.. Hines second ground of
criticism, as to the ineffciency of the executive
and the decline in amount of new insurance
business we have only to say that in our opinion
there are many reasons for that result. We be-
lieve it to be chiefly attributable to these three
causes:
First-The determination of the company to
reserve for surplus a part of the premiums
which through the pressure of competition in
dull times of insurance was being added to the
commissions of soliciting agents In insisting
that these commissions should be fair, bat not