St. Paul daily globe., 1892-01-23
Report of the New York In
Surance Commissioner on
the New York Life.
Neglect and Trifling Hinted
at in Numerous Instances
Mentioned.
Careless Management Noted
in the Expenditure Of
Large Sums.
The Company Declared Solv-
ent Despite All Losses Up
to Date.


the insurance department of the state
of New York of it's examination into the
condition and affairs of the New York
Life Insurance company WAS made pub
lie today by Supt. Pierce. Mr.. Pierce
presents summary of the result of the
investigation made by his deputy.
Michael Shannon, with his own COM
ments thereon. Following are the
principal parts of Mr.. Pieree's state
ment:
1.-The most satisfactory result appear
ing in this report is the conclusion
reached that this great and useful insti-
tntion of our state is beyond all question
solvent. and is the actual owner and
posSesSor of a surplus of available as
sets and property exceeding its present
liability by the sum of S6,03S, 1868 ac-
0rued upon its general account. and
s6,670, $3.50 upon its tontine accumula-
ton. Those interested may be assured
that this conclusion is accurate and
trustworthy. The appraisals of the
real estate and mortgages owned by the
company were made in every case by
competent authorities selected by N.Y.
self after much care and consideration.
and full confidence may be reposed in
their fairness and accuracy.
Cost VS.. Value.
THE actual cost of Holbrook hall to
the company was 81, ,009. .S66.6S, while
the actual value thereof. as estimated
by the appraiser of the department.. did
not exceed S4S0,000. The account of the
matter presented to the committee of
trustees leaves a strong impression
upon my mind that the interests of the
company were neglected and trihed
with in its earlier history. A careful
consideration of the facts leads me to
state as a conclusion that no reasonable
excuse or explanation has been offered
TO rebut the charge OF gross neglect ald
incompetency in the management of
this property. from which resulted the
great loss of over half a million dollars
to the company in this single invest
ment.
There appears to have been loss of
1888, 994 in the Plaza hotel investment.
If we assume that the appraiSement
was correct. The home Office building
also shows large shrinkage in value
as appraised by Mr.. Coleman and noted
in the report. The real estate invest
mentS in Paris, France, which cost the
company 81, 102, ,604.05, and which the
French government values at only S470,-
400, and which the company's own
selected appraisers value at only $751;
300, furnish another instance of
Great Shrinkage
in value. and apparently of great ex-
traPagance in the price paid for it. The
explanations offered are, in my opinion,
insufficient TO relieve the executive Off
GERS from the charge of excessive ex-
penditure and bad judgment.
Under the head of Agency Man
agement," Mr.. Shannon reviews fully
the facts relating to the accounts of the
SDanish-American department.. l.. G.
Vanuxem q Co. and S. l.. Dinkeispiel.
After a careful reading and eXamina-
ton of this portion of the report, am
forced to the conclusion that the facts
presented by him clearly indicate that a
state of affairs exists in the company's
agency management calling for the Sc
vereSt criticism and condemnation, and
which if continued, must prove ruinouS
to the company.
According to the statements of the
company'S accounts these three agencies
are indebted to the company in the fol-
lowing amounts in round numbers, to
wit: Spanish American department.,
S500,000; l.. C. Vanuxem 81 Co., s57O, 900 !;
s. l.. Dinkelspiel, S348, 600, being up
wards Of 81 ,506,000 by these three agents
alone.
Shannon,s Facts
''Mr. Shannon presents facts that
leave no doubt in my mind that several
hundred thousand dollars should be
added to these figures On account of
large allowances improperly made,
and my review of the facts convinces
me that this whole agency business,
in all its features and relations to the
company and the results therefrom,
was entirely in favor of the interests
and profits of the agents and against
those of the company, and the manage,
ment were guilty of gross neglect III
their duties in permitting such contin-
uOus deylatiOnS from ordinary business
rules to the great loss Of the company"
The company owns real estate in the
states of New York, New Jersey, Mis-
souri,, Minnesota, Nebraska, and in
Montreal, Canada; Paris, Berlin, Wen
ma and Amsterdam. The aggregate
value of this real estate is estimated at
S14 ,00G, 900. Seventy seven parcels of
land are situated in the state Of New
York. fifty-iive in New Jersey, four in
Missouri, four In Minnesota, two in Ne
braSka and one in each of the foreign
cities named.
The Big Office Buildings.
Within the past three years the COM
pany has completed Office buildings in
the following cities and at the cost set
opposite each as per Mr.. Van Vran-
ken's report, viz: Minneapolis, 81 .O67,.
050.25; st. Paul, S796, 1890. 15; Kansas
Citv,sS1, ,742, 952.7S; Oma ha. 81, 1sS, ,091. SO;
Montreal. S791. .341.53. The net rentals
from these buildings have not thus far
brought in fair return for the money
invested, and there is no Immediate
prospect that they will prove as profit
able as the investments of life inSur-
ance companies should"
The report of Michael Shannon,
deputy superintendent of the insurance
department.. is dated New York, Jan. 4,
and in opening he says: This examina-
ton was made as of June so, 1891. and
on that date we find that its assets and
liabilities were as follows: Totals assets,
S120, 7l0,690; total liabilities, $685.
002,014; gross surplus, s14, ,7OS, ,675.
With Mr.. Pierce's statement is the de-
tailed report of Mr.. Shannon, from
which what follows is taken. Mr.. Shan
non considers seriatim the charges
made by Mr.. Banta, the deposed cashier
of the company.
Banta's Charges.
Mr.. Banta declared that the company
has paid many thousands of dollars in
the shape of blackmail to prevent ex-
posure of charges of misconduct in their
management.
To this Mr.. Shannon replies: The
truth of this charge is admitted by Of
ficers. Several thousand dollars were
paid to one Joseph Howard for the pur-
pose of suppressing the publication of
articles that he had prepared attacking
the management of the company.
Two other charges made by Mr.. Banta
were: "The president has directed the
purchase and sale of millions of securi-
ties without the knowledge of the
finance committee, in some cases pur-
posely withholding information of in
tended sale, because he knew it would
be objected to. He has directed
the sale of securities without
consent of the finance committee
through one member Of the finance
committee with the agreement that the
profit of the transaction should be