The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1898-01-04

surance fraternity, that in the disposition
OF the matter Of proper valuation OF the
company's policies he has very ably handled
a most intricate and difficult subject his 1e-
port clearly demonstrating that the basis upon
winch he has arrived at the legal reserve
llaDlhty Is eminently just and cannot BE-
CONSIDERED otherwise than correct. By this
1siua ton. the reserve. to which is properly
ADDED the bonus credits previously dstribut-
Cd, and the insurance fund. less all accrued
ard unpaid death losses, also less a certain
per cent Tor the insurance that must be
given to ID. A. policies without further pay
ment by theml before the fund is distributed
IS mere than doubled, as compared with the
reserve liability the company was required
TO show in its statement flied on the first OF
the year BY comparison. it will be seen
that over s26 0G9 of the reduction in com
pany's surplus is accounted for by this enc
item OF reserve. In explaining his method
or valuation, as compared with that under
which the policies have heretofore been val
ued by the insurance department Mr. Fack-
Ter very clearly accounts for this increase.
1t IS but fair to state that. as far as the
increase in this item of liability is concerned,
no blame can attach to the management Of
the company.
The exhibit of the company's assets and
liabilities, as set forth in this report, shows
its capital stock of 800 COO impaired to the
extent of s42S11.34, with its surplus on policy
holders account reduced to s57,188.66. This
very great reduction in the company's as
sets ana surplus, as compared with the an
nual statements filed with the various de-
partments at the beginning of the present
year. Is FULLY accounted for and commented
upon IN this report. The standard of solyency
Of a life insurance company, as fixed by the
statutes of the states of Minnesota and IL
iinois, is that the actual net cash value of
times to its liabilities, including the legal
reserve on its outstanding policy contracts;
therefore. the company has a margin ex-
ceeding $4,000 over and above the statutory
requirements. 1t has on deposit with the
state, for the protection Of the policy holders
slC0,OO0 the same comprising United States
NfTnn 10
guaranteeing that their interests are and will
be fully protected.
We are constrained to advise that as
result OF this examination only one conclu-
SION can De drawn, namely That the COM
panys future success is clearly dependent
upon there being placed at the head of it's
management thoroughly competent and ex-
perlenced insurance man, who will COM
mand the confidence and respect of the in
surance public, and particularly those who
are or may be directly associated or connect
ed with the general conduct of it's business and
aHalrs Very unfortunately, there appears
70 De at the present time an utter lack
or harmony, as well as insurance knowledge
among the officials, in whose hands is in
trusted It's general management. There should
De no o. question Of the companys future sue
cess II intelligently. honestly and economical
~ managed 1t is practically the pioneer
joint stock, or so-called legal reserve COM
pany, in the United States to write what is
termed under average or Impaired lives, and
as the legal reserve on outstanding policies
indicates 1t has placed upon its books a good
volume OF business.
The fact that the company I'D to the nres
ent time has failed to increase Its net assets
should not be considered as a practical de-
monstration that the insurance of under
average lives Is a failure, but rather az an
indication that 1t has not had at it's helm
men of sufficient practical insurance knowl-
manage its affairs.
In concluding this report. we are pleased
TO advise that the directors and stockholders
give definite and positive assurance that such
steps as may be deemed necessary to ensure
the continued absolute protection and security
81 the policy holders will be immediately
Insurance Commissioner, State Of Mime
sofa
j. ]. Brnkerhoff,
Actuary. ms. Dept, Illinois
Jas. R. B. Van CIeave,
insurance superintendent State of Illinois.
DEARTH's SUPPLEMENTAL.
state OF Minnesota; DEPARTMENT of Insurance
st Paul, Jan. g. 1898
supplementary Statement in Re Examination
Life Insurance Clearing Company
SINCE the report covering the examination
OF the Life Insurance Clearing company
MADE by the insurance departments of Min
nesota and Illinois, submitted to the off,
GERS OF the company. the assurance has been
given by the board Of directors that the future
management Of the company will be above
criticism, and as a guarantee Of this fact.
the resignation of President Scott has been
OF an able and experienced insurance man,
one whose executive and managerial experi
ence VIII inspire the confidence of the gen.
eral insurance public, viii be at once Sc
cured, thus guaranteeing that the Interests
of the policy holders will be carefully con-
sclentiousiy and fully protected.
While the impairment Of the capital stock
OF the company will not be Immediately
made good, the fact that the company is alb
soiutely solvent as far as the interests of
the policy holders are concerned. there being
Of
there is on deposit with the state 100000 in
hrst-class securities, solely for the benefit
ana protection of the outstanding contracts,
there need be no concern whatever on the
part or the policy holders as regards the
continued and absolute protection of their in
terests.
With an able, honest insurance man At the
helm. and a board of directors who w,l.. in
the future, carefully guard arl direct the
general management of the comran.y, there
should be no question to it's FIGURE Ircs-
perity and success. There is undoubtedly
wide field and great demand for a company
writing the particular line of business known
as under-average insurance, and the Life In
surance Clearing company is possessed of a
foundation upon which should be built a large
and prosperous insurance corporation.
Elmer II. Dearth
Insurance Commissioner.
FACKLER'S REPORT.
Hon. Elmer H. Dearth Insurance Commits
sioner, st. Paul, Minn.-Sir: In compliance
with your request, I have participated in an
examination Of the Life Insurance Clearing
Company of st. Paul, and duly lay before
you the results of my investigation.
The company began business May l. 1892
and ON plans so peculiar that some expIana-
ton thereof would seen necessary to pre-
vent any misunderstanding of the details of
this report.
The company organized to make a
speciality of insuring what are called under
average" lives"-persons in fair health whose
prospects for longevity, for various reasons,
appear to be less than the average thus pre-
venting their acceptance by ordinary life in
surance companies This branch Of life insur-
ance had been practiced for many years in
Great Britain by companies doing a general
business, and also to limited extent on this
continent. This company, however, proposed
to devote itself exclusively to insuring this
class Of lives, and adopted an entirely novel
method, modelled partly on the methods of
cooperative companies and party on those
OF regular life companies, making a hetero-
geneous combination which it Is very diff
cult to consider from a scientific stand
point.
The annual premiums charged were about
the same those of companies generally
but the insurance subject to an increas-
ing deduction according to the age attained
thus person insured at the age Of thirty
five for the nominal amount of 81 900 was
given policy under which the company
might deduct S41S.69 in case of death the first
year, or S4S6.60 the second year, and so On,
the deduction increasing more rapidly each
year, becoming S629 the twentieth year and
$3.50 the fortieth year. To offset this de-
crease In the insurance. the policy provided
that certain bonus credits might accrue
to reduce these increasing deductions, and as
was estimated. even finally cancel them. This
was to be effected by putting a certain part
of each years premium. after the first into
the insurance fund" the balance OF which,
after paying death claims. should be divided