The San Francisco call., 1897-02-27
LIFE INSURANCE.


loans made was much smaller than usual; a
natural result OF the conditions which made it
mar haro @ 10 get money 20 pay with and also made
a less 3 use ior borrowed money @ Old loans were
loans were made for 80, 202, 279 81.
Foreclosures and Sales.
| Other results of the hard times were the
prolonged lnablIlty OF many to pay interest,
compelling US to take under foreclosures
great deadness in the real estate market by
| reason of which comparatively few sales
were made, amounting TO $124 325 33. There
! were a good many inquiries after property
but most of then were made in the hope that
the pres sure OF the times might dispose us to
| offer at low prices. We are fortunately able
! TO hold our property until usual conditions
| restore usual prices.
| The advantage of being able to do this is
| well illustrated in own history. Since
! 1879 the company has sold properties which
! ii had then acquired under foreclosure at a
cost of $7,531,61S 80. In an examination
made that year the Insurance Commissioner
| valued these properties at only SO, ,445, 773 an
] apparent loss of 81. 0S5, ,S45 80. But we did
not sell at those figures. We waited and sold
| as the market wanted 1t, tor 80, 9226 Got 81, or
/ ST, ,391, OBS OIL more than the properly cost,
! and $2,476,SS3 81 more than the Commls
! sioner's valuation.
a bly, sell for as much as they cost, others VIII
sell for more, and. judging from past expert
ence, we see no reason 10 apprehend any less
! on this Item as whole.
There were paid off or sold during the year
municipal and railroad bonds which cost us
1864 ,633 80. and other bonds purchased al a
| cost OF $793,610 Al. The market value OF
such securities i'll general was considerably
less on December 81, 1896, than on December
81, 1895. The shrinkage on our holdings was,
however, only two-thirds OF l per cent. These
hold Ings are tor $13,2S5 600 par value, cost
ing SIS, ,606 034 81. and worth at the above
daIe !4,O5s,9O7 by an entirely conservative
valuation.
Profit and Josa
A small net loss of $13, ,105 81 on some of
the real estate sales ana sundry items was off
set by net gain OF $63,246 62, mainly on
transactions in bonds, leaving 500, 14O 70 to
the good.
Mortality.
We paid to the families and estates of de-
ceased mbers during the year $4. LOT, ,366 %.
The value ana timeliness of this great sum to
its many recipients in their hour of need are
the measure OF our yearly service to the house
holds OF our country. Its helpfulness can be
somewhat realized If one will but imagine
that amount being constantly distributed
among cases like some that will occur TO any
OF US, ana VIII think what 1t has meant TO
| them, or would have meant to those who did
not have it. 1t is an unmiXed good, coming
| when the necessity for such help is greatest
pected and provided for that the savings there
| from were $436.6S9.
II should always be borne in mind that it is
| not the amount of company's death losses
! nor their proportion to its amount at risk, nor
| 20 its income or its assets which are signiti-
cant of their effect upon its prosperity, present
| or future. The older its business, the longer
| it has been in force, the greater the average
| age of its members, the greater will be the
| proportion OF deaths and the volume tlosses.
| The question is not only what losses have oc-
| Cured, but what were expected What losses
were anticipated when the premiums and re-
serves TO meet them were computed? Are the
| actual losses inside or outside that expecta-
| ton? That is the only pertinent ques ton in
| the matter.
Expenses.
| The ratio of expenses to income in 1896 was
! 1885 per cent an increase over the usual
| average of about one-half of l per cent. This
was ue 10 no increase in the cost of getting
| business or in any general expense but solely
1 to the increased cost OF repairs to real estate
| taken under foreclosure and necessary to put
| ii in proper order and to rightly protect our
property. The same careful and systematic
| economy which always distinguishes this
company has been riGidly maintained.
New Business.
| In consequence OF the unbroken business
| depression uf 1896, ana especially during the
months of the political campaign, and because
we spent no money trying TO overcome these
! obstacles, we wrote about 10 per cent less new
! business in 1896 than in 1895. The renewals
| of old business were SO well kept up, however,
| that we lost during the year on the whole
| amount in force only $619, ,43O.
| We believe the perslstency OF the old busi-
| ness OF the Connecticut Mutual is quite
| unique. 1t is an element OF great strength,
| and OF chsapness as well. 1t costs lar less to
| take such care of old business as TO keep it
than TO get new to replace II. And We are
| fortunately not in the position oil those com
pauies whose heavy expenses can be met and
| whose extravagant representations OF ''post-
| poned or accumulated dividends" to be paid
| fifteen or twenty years hence, can be fulflied
| only by the proceeds of heavy forfeitures of
| old business every year.
| Dividends.
| The dividend paid on each policy in 1896
was larger than the corresponding one Tor
1885 There viii be a similar increase in divi-
dends and consequent decrease in the cost OF
insurance on policies renewed in 1897.
Surplus.
| We call attention to those items from which
| it is possible to derive a surplus and to the
manner i'll which they have been applied
| during the year, with preliminary word OF
! explanation.
! We agree to pay certain sums on the occur
| renee of a certain event. To do this we must
| have premiums large enough to pay running
! expenses the current death claims, and pro-
! vide a reserve for the greater mortality that
| Will come with the increasing age of the busi-
ness. We can earn interest on that reserve
| while we hold it. 60 we assume maximum
| death rate, a maximum expense rate and
| minim um rate OF interest, and calculate our
premiums and the reserve TO be laid aside out
| of them on those three assumptions. If
| the death losses and expenses are less
| than we assumed we save the difference
| from the premium; if the interest is more we
| save that also. There are sundry other Incl
| dental items. Here is an exhibit of the opera
| ton OF these several factors in the Connecti-
| cut Mutual In 1896:
| Part of premium provided for
! expenses, etc c...-.............. 1857, 256
| Inte est and rents in excess of
ra,e assumed ...............1 1,O6O,722
| Balance, profit and loss. ...'.,. 30, I4l
| Saved fIom expected death
losses ..............,.... 496,6ss
! Saved from reserve on surren-
! dered poicies................ 129,759
Sundries.. ...... ................. 25,437
Total. $50, ,O04
! This total of items applicable TO expensea
| dividends, etc., has been applied as follows:
Expenses Ct Management. 1885, ,7I6
Taxes 80. ....-......... S56,431
| IN arko valu nf