The Bennington banner. [volume] (Bennington, Vt.) 1858-1894, 1892-02-05

one of the attractions of the city in
which it is located" Their influence
upon the company's business is extreme
| ly important. In 1886, the year before
the buildings were begun, the aggregate
new insurance written 10y the company
in the territory in question, was SS,047,
200. This aggregate has steadily in
creased until for the year 1891 1t amount
ed to SOS, $3.50, $50, which is the largest
business that was secured in that field
during that year by any life insurance
company. And not only was the guam
| tity of the business remarkable, but it's
quality was such as to make il most de
Nirable in every way. Without the build
ings, it is safe to say such results could
not have been Obtained. may add, by
way of general comment on real estate
matters, that while the Superintendent
notices that the company owns one hun
tired and fcrty-sevrn parcels of real es-
tate, and has nine hundred other parcels
| under mortgage, and the further fact
that these properties are scattered not
| only through many States of this cUun-
try, but over two continents, the nature
OF its duties made it necessary, perhaps,
to omit comment on the real estate trans
actions in which profits have been real
lied, and to cOntine himself practically
10 the four parcels which he discussed;
but your interests reach further, and you
will naturally he pleased To lean in this
way not only the relation of the items
criticised to the comrany's total hold
lnSS, but also the circumstances sur
rounding each case.
If these related facts tell you anything,
it is the probable existence to-day of II
surplus largely in excess of Sl5,0O0,O00.
We all accept the supeIinttndcnt's fig.
urcs, yet as you and are peculiarly in
IereSted in the whole case, we are pei
mitted between ourselves tO view the
possible effect of these facts. Suppose,
Tor example, that the superintendent has
excepted the we'll known opinion of one
of the heaviest holders of New York real
estate Us to the value of thePlaza Hotel.
81, 100000 and that he had accepted the
value o1 our home office building on II
rental basis of per cent net, and that
he had accepted the inside figures of the
Inspectors of the Credit Funcier as IT,
the value of the Paris property, his net
deductions on real estate, including his
heavy deductions on HUlbruuk hall,
would have been only 1929, 309.25. This
lone would increase our surplus $780,
900.
AGENCY MANAGEMENT.
Under the head of agency management
the Superintendent of Insurance says
rhat Funds OF the company tu the eX-
tent of hundreds of thousands of dollars
have been advanced to these agents with
rut interest, and upon insufficient sccur-
i " TO persons unfamiliar with the HE
Insurance business this statement would
seem to indicate the worst possible man
agement of our agency department The
iacts ought, therefore, to be folly eX-
planned. The general system upon
which advances have been made to
agents by this company and by other
life companies may be illustrated rs fol.
lows 1.-THE figures used being merely illus
tratiOnS and not tile terms of any actual
existing cOntracD: The company, we
will say, enters into contract with
Brown, for State, that he shall receive
Il commission of % per cent of the first
years premium ON all policies placed by
him, and renewed commission of five
per cent. on each renewal premium paid
IN such policies. Brown, of course,
finds it necessary to employ Jones and
others as Sub-agents, and he ordinarily
pays them the % per cent, commission
allowed him by the company on first year
premiums. Brown relies upon his re-
newal commissions for his own cOmpem-
satiUn, but while he continues in active
service he is frequently allowed to draw
= nXrd amount az IlnsI commissions tor
his living EXPENSES, such amount being
regulated by the circumstances of the
case. As competition increases, Brown
finds that in order to retain Sub-agent
Jones he will be obliged TO paw more til an
- per cent. commission. To do this
Brown is obliged to make new arrange
ment with the company. lnsteId of in
creaSing Browns first year com mission
the company agrees to advanc; 10 lnm Il
sum equal to two renewals TOR 10 per
cent? on business SccurcdOy Jones and
to hold all of Browns future renewal
commissions under the contract as se-
Guilty for the advance. Brown is now
able to pay Jones 81 per cent. commits
sion ana SO retain his services. But at
the end OF the year Brown is apparently
IN debt to the company i'll an amount
equal to 10 per cent OF all first year
premiums secured 10y joins, AMI the
larger the business the larger the appar
eut debt. This will continue until such
time Us the old bushes kept on the books
greatly exceeds the amount uI new bust
ness annually done. In Il rapidly lmcrcas-
InS business this result viii not he reach
Ell for several years, but if the total
amount paid to Brown has not exceeded
what the business was actually worth
the time will come when the commissions
accruiug under his contract will exceed
the tot | cost of the years OusInrNS.
Browns business from this time forth
viii require less expenditure on the part
of the company in proportion t. Its vol
une than therefore,, aud his sO-Calleu i'll
dcUtedness, as 1t appears under his CON
tract, will disappear more rapidly than
1t accumulated, at which time Brown
viii realize the profit for which lie has
worked. The company having already
paid Tor this business in Large pant, will
nave lower expense ratio to tins extent
in the future, and its surplus will be cor
respOndingly increased. You will notice
mat this debt does not represent money
which Brown has squandereu or retained
tor his own uses. lie has simply USED
the money To carry on the cUmpany's
business. If it should ever happen that
Browns renewal commissions i.ul To cIu-
Gel the debt, the business has simply cost
the company what it cost Brown and The
company, and has taken good care that
the total amount of commissions and ad-
vance received 10y brown should never be
Il sum greater than the new business Sc
cured by him was worth.
l.. c. vANUXEM Il co.
The superintendent criticises the