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

| cial examination. This account is made up
OF the aggregate dividends derived from the
yearly divisions OF the insurance fund
,ed 1T was found that the company. in June
tSso' nao transferred all of this account to
afe general fund" Of the company. and
! afterwards transferred the same back ayaIn
| 10 the bonus credit" account 1t was stated
- SSAp ntio or these cross entries that the
eddi,, Do1us credits had been converted into
t;sti insurance and reyersionary GER
tinGates LOT the same issued to the policv
II ri-h;, 80 mat the company had considered
IN 10 10 treat the bonus credits as used
! op ~ Duylng reVersionary additions to the
- put later in the year had considered
credit a 70 iet the money stay in the bonus
credits account Sa t., In 1897 the cash bonus
Se were also converted into Insurance.
r-ith a,.o"eo 20 stay in the bonus account
", %i'nou. s any cross entries. This course great
seems clear that hereafter the reyereionsrv
sohna' thus made to policies must he
Sbo nt foI ana valued as paid-up insurance.
was deemed sufficient to take the io 49, :
amounts OF cash that were converted into re-
os fba ana regard them the present value
e. ne iesersions. adding a small percentages
was made ee TIE conversion
init 1t has been charged that by the time the
Insurance fund was divided for the date Of
jitic5 1927, number Of policy holders en-
i tn.lea 70 bonus credits had lapsed for nrern-
them were si note that date and that none of
actually been entered to their credit IN 4 t5e
t gonus dist' although the policies stipulateG
! charge annenUs Ce should be sent. This
i tnat IN several cases. where the holders Of
snd policies applied for pad-up policies,
amounts u based daT We received s the same for
nne oonus credits allotted for 1887 were 10,
noitcv boIde ejaculation except in where
po:Icy hoiders demanded their rights
In another case a policy holds LIZ H.,
b btter Jan. l. 1897. and before the division
bonus aa D eead,t completed was not allowed the
! clearly entitled to It, These trsnsact;onS ousn
| Qulre no comment IL
TRY TO LAPSE"
m aIogt htty renewal policy cards were found
stated IN explanation that these policies Were
maiieea ON form of contract that ne consid-
u andur and that the atcve
vent REVEALS of the policies in case tbev
| should lapse. 1t must be conceded that tba
b ~ San a, OF company should be allowed
" use discretion in cases where policy hold
efs lapse contracts. which he considers tn
nave peen unfavorable to the comnanv hut
III sufn cases better memorandum would
nave been. do not revive If lapsed >, Tba
words actually used are too Suggestive ~
| uhderhand attempts to cause Iapses: indeed
a late officer of the company has made afIi.
oaVit that the president intended that in such
cases premium notices should be omitted
intending to declare that they had been sem
II n Ihe tL policy nfyo holder complained.
IN Two other cases policy cards wcro found
| endorsed do not send notice." Regarcing
these. President Scott produced some 1apers
.esnang to show that the policies lad been
o or. hS ny fraud and that the policy held
ers mad no equitable claim on the conpaoy's
consideration. AS before stated much dis
erection must be conceded to the president OF
d company. who may claim that sending a
nouce In SUCH cases seems like conserving
10 overlook the fraud. Where the general
management OF company is fair and hon.
1raDie; all such acts must he supposed to
nave been done honestly in q PROPER eyer-
else OF executive discretion. unrl the con-
trary IS proved. Whether the present man
agement OF this company 8 entitled TO such
d presumption IN its favor, your own cxps-
r,ence In connection with it's report for Pec.
o. 1885, together with my REMARKS upon the
charges against the insurance fund and upon
the bonus credits due lap3,d policies will
enable you to decide.
In the appended stat >rent CT the valuation
OF the company deduction ma 10 from
PRED insurance liability included ia these re-
serves is covered by the insurance fund.
I'M rms valuation OF the policies is made for
Oct 81, 1897, and includes the cost of insur
ing all the dividend accretion policies for
one-half year. or until May 1, 1898, but in
case any of these policies become claims dur
ing November and December. they will be
PAID out OF the insurance fund before the
same is divided; therefore, the computed re-
serves are reduced by what is estimated to
be fair allowance for the tabular cost Of
insurfng the divided accreton policies SO
| far as they are entitled to further insurance
| before the fund Is divided. Thus policies
which are paid up to date beyond 1897 are
entitled to two months insurance out Of the
| present fund.- and those that have premiums
falling due in November or December are on
the average entitled to about one month g
| insurance from it.
In this connection 1t should be remarked
that at the outset the company made g
| serious mistake In arranging to divide the
| entire insurance fund left in it's hands each
| Jan. LIST without reserving for the unexpired
| insurance due the policies then in force It
Is just a. erroneous as though a fire insur-
che H. all
iaticns without providing reserve for the
| insurance Of its policies UP to their expira-
ton. The managers of this company have
already recognized the propriety of laying
| aside the estimated contributions Of those
not yet entitled to participate, also the amount
| payable for accrued death claims, and it is
| recommended that they also set aside the
estimated cost Of insurlng the dividend &C
| cretion policies until their next premiums
fall due. The utter Righteousness Of the
present system will be evident If we suppose
all the premiums payable annually on Dec.
81 and all the policies entitled to participate
ON the following Jan. 1; In this case divi,
leave nothing for the payment Of death
claims during the year.
If the managers OF the company make this
change it will considerably reduce the LA
bility account of the insurance fund. as
| the amount as held in reserve should then
be regarded as diminishing the liability on
account of the fund. 1t has already been
stated that the amount due for accrued
claims on dividend accretion policies is prop
| erly deductible from the fund.
It is clear that the amount which the COM
pany will either divide among It's policy
holders on Jan. 1, or set aside for future
division, must be considered as q liability.
! Nearly all the dividend accretion policies
| are now participating, and it Is estimated
| that the part of the fund to be set aside
| as the contribution OF participating pol
cies will be only about per cent Of it, so
l that even IL this part of the fund were left
out of consideration as a liability. 1t would
not affect the total result appreclaby
The officers and employees Of the company
| were uniformly courteous and apparently
| ready to render all needed assistance but
| the fact that none Of them had been in its
| employment for as much as two years, or
! had any technical knowledge Of life insur-
| ance caused much difficulty and loss of time
| in obtaining or trying to obtain explanation
| of many entries that required calculation
Col j. j. Brinkerhoff, the experienced act
| uary and examiner of the Illinois insurance
| department, co-operated in the examination,
| and rendered valuable assistance for which
| I desire to make due acknowledgment. Very
| respectfully, David Parks Fackler.
| Consulting Actuary and Examiner.
| New York, N. Y Dec. 3, 1897.
| FACKLER'S SUMMARY.
Valuation of the policy liability of the Life
1 Insurance Clearing Company of St.
| Paul, Mimi. for the date Of Oct 81, 1897.
| on the basis Of the actuaries' table. with 4