Morning journal and courier. [volume] (New Haven [Conn.]) 1848-1894, 1889-07-23
of any company reporting to this depart
x,apf
TREATMENT OF THE INSURED.

honesty and economy of it's management are
beyond question. Fair treatment OF policy
holders is characteristic of the management.
The company pays fair surrender values, and nd
has charged itself voluntarily with $1,000
(part of $2.1 ,429 of liabilities above) on ac-
count of policies which have discontinued
and whose owners would have lost all right
| to surrender by reason of lapse of time, ex-
cept for a resolution of the board granting
them the same privileges which had been ex-
Of later date. Hundreds Of thousands of dol
lars have been paid out uuder this resolu-
| ton, which, by strictly standing upon the
terms of tho contract might legally have
been covered into profits from forfeitures.
| Several millions of dollars have been used In
| anticipation of post mortem dividends on
note policies, which the company might have
| of its contracts until they matured. Owing
| to the fact that new policies were being issued
| without postponement of dividends, equality
| between insurants required that they should
be put upon the same basis a. nearly as pos
sible by paying up their deferred dividends.
For the past Eve years, which was as far
as it was thought necessary to inquire, only
$41 ,790.39 has been abated from claims by
reason of compromise, out of SIS, 371 ,544
paid. This was justified by the term of the
| contracts, and the circumstances of the cases.
This remark will likewise apply to the $685.
| 900 of contested cases charged as liability.
a QUESTION OF POLICY.
The management has been severely criti-
| cized because a large amount of new business
has not been secured, because of the large
| amount of real estate cerried at a compare
| lively low rate of interest, and because of the
| defalcatisn of nearly half million dollars by
it's late financial correspondent Joseph A.
Moore of Indianapolis. Upon these points
L will iud0a for hiDnna1f The ~
| missioner can only state the facts as he finds
| them with such pertinent observations as
seem necessary to explain them or aid in a
fair conclusion. About 1870 the old note
plan, upon which the company had obtained
| all of Its business, was discontinued for the
| all cash method in common with other Con-
| nectiout companies liabilities.
| The agency force, educated to a different
| system, became more or less demoralized,
| and the company lost the Roadway which 1t
| had attained. Shortly after 1878 compete
| ton between companies caused ~ material
| and continuing increase in the rates of COM
mission paid to agents Many companies
adopted speculative plans OF insurance
| based upon exaggerated estimates of results,
| and several went abroad for new business at
| greatly augmented cost. Into this competi-
| ton the Connecticut Mutual declined to en-
| ter.
It has therefore remained content with its
| old agents at its old rates of commission
| and standard plans of insurance, believing
| that it had acquired sufficient size to obtain
all that was valuable in that respect, and
that the interest of its present clients would
! suffer by the other course. While the COM
missioner does not pretend to be an expert
| in the management of an insurance office,
these reasons seem to him to be entitled to
great weight, and 80 long as the company
has substantially held its own, never having
L had of OF ma
time upon its books in excess of present
holdings, it would seem that until its critics
! can demonstrate that its dividends and sur
| plus would have been greater as to each in
| surer by another course, the charge of error
| in preferring quality to quantity may we'll be
considered not proven.
As to the real estate held by the company,
while if sold at the present appraisal, and
taking into consideration the balance of
profits derived from sales for the past ten
years, there would be material gain over
the cost price; nevertheless in view of the
small amount of rents derived therefrom
since it was acquired, the account will stand
at loss. It is but fair, however, to state
that the portions of this real estate which are
responsible for this loss were derived from
loans, purchases and buildings made in the
inflated period prior to 1874. Property &C.
quired by foreclosure of mortgages made
since the end of the depressions and since
1877 shows handsome profit over cost and
interest
The mortgages now on hand were largely
made since 1877 and under the present off,
GERS. They exhibit as a whole healthy con-
dition from which no fear OF q repetition of
loss, such as was before experienced, can be
reasonably entertained in the event of anoth-
er commercial depression. About two
thirds of these outstanding mortgages are up
on farm property of six and seven per cent,
rt,t al, havr ~G,.lI--
The interest has been paid promptly and
foreclosures have been few, and those bought
in by the company have, as a whole, shown
handsome per centage of profit on the sub
sequent sales. The farm mortgages are
passed upon by special committee of the
board at weekly meetings and are made
through representatives of the company in
the several localities and not through loan
associations.
THE MOORE AFFAIR.
It was to one of these representatives of
financial correspondents, Joseph A. Moore,
that the recent defalcation at Indianapolis
was owing. Before this examination and in
cluded in the business of 1888, the company
had marked off from its assets on this &C.
count the sum of $483. 448.01, of which
$40, 963. 72 stood for the principal of loans
collected and embezzled by said Moore. The
balance was for interest, rents and taxes,
collected end not turned over to the COM
pany. One of the remarkable peculiarities
of these transactions was the singular conf
dence displayed by those paying off loans In
not demanding either the return of their
notes or release of record from their mort
gage obligations.
This unaccountable looseness of business
method on the part of borrowers prevented
the company from knowing that the loans
were liquidated and left the evidences of in
debtsdness still in the company's possession
l at Hartford. It has been the custom of the
| company for many years to require bonds of
| it's soliciting agents and to have special
| from the home Office examine the books and
| accounts annually at their agencies. There
| being no contracts between these financial
| correspondents and the company, and their
| compensation being derived from the bor-
| rowers who used them as o mere convenience
l in transmitting money to the company upon
| contracts requiring ALL payments to be made
| at Hartford only, and these correspondents
| having business relations with others beside
Itself, the company did not regard them as
its agents or deem that it had any right to
i an inspection of their books.
It relied upon the possession of the evil
j dences of Indebtedness and receipts of inter-
| est (Which in these cases Moore paid from his
own pocket) as proof that the loans were yet
due the company. The other amounts taken
were partly from current collections and
partly from overdue interest, which, the COM
pany was led to believe by Moore, had not
| been collected on account of some temporary
| embarrassment of the borrower, such as FREE
quently occurs in the usual course of bust
ness. Since the closing of the books for 1883
| a few additional items of small amounts have
been discovered to add to this loss. These
| are more than offset by sums realized from
| the sales of property turned over to the COM
pany by Moore when his Irregularities were
l discovered. There are considerable sums
| which may yet be realized from this source,
| but as they are not yet in hand and may be-
! come complicated by litigation and belong
rather to the profits of 1889 than to the veri-
foation of the condition for December 81,
| 1883, it ia unnecessary to cucumber the pres
ent report with guess at the amount of the
probable outcome.
A study of the situation made 1t evident
to the commissioner that no absolute
knowledge of the limitations of this defal-
cation or of the possibility of a similar
state of affairs existing in other localities
could be had, short of direct communica-
ton with each borrower. He has therefore
caused to be sent, under the supervision OF
the department, circular so each mortga.
gor stating the amount of his loan and in.
| terest due, as found upon the company's
books and papers. Answers have been re-
turned from most of these, acknowledging
the correctness of the statement. As to
those which have not answered, second
notice is being sent out asking for a reply.
Owing to death, changes of address, sales OF
mortgaged property to third parties, etc.,