The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1900-07-24
INSURANCE COMMISSIONERS IN
VESTTGATTON OF THE BANK
Frs LIFE ASSOCIATION
WELL ADMINISTERED
But Some Features of Methods Are
DisapprOved and Request Made
for Changes as Recon-
mended,

euI dllce commissioner OShaugn neSSy
last week. While It's business was found
in good condition, the commissioner found
occasion to make some requests and
recommendations, which We're received
! by the board Of directors and will be
acted upon at the next meeting of the
trustees.
Inc sworn statement of the company,
mace to the insurance department, Dec
81 last, was found to be correct. The
| company had, on that date $946,S26. 70 as
sets, after the commissioners disallow-
| ance of S12,339.25 in guaranty trust fund
notes not due and unsecured, with total
liabilities Of $38,219. OF this $9G, 900 rep
resented losses reported but not adjusted
$z'OoO claims resisted, and $219.2l premiums
or assessments paid in advance.
among the assets were loans of SIS, 472 II
70 directors, $4,000 of which were secured
by collateral and $4,472.17 unsecured. and
therefore disallowed as assets.
Inc commissioner calls the attention, of
the officials of the company to the fact
that the general laws of the state per-
tanning to- insurance companies prohibit
the loaning OF funds to officers or to the
committee charged with investing the
FUNDS or the company. These laws ex-
clude lie and casualty companies operat-
ed on the assessment plan, but the COM
missioner believes the laws would extend
TO companies incorporated under the CO.
operative or assessment laws; and even
though they do not, it is a practice that
should be discontinued
The company is found commercially
prompt In payment of losses, with DO dis
position to litigate or compromise un-
necessarily.
Lack Of complete system of vouchers
is criticised, no record being available
of expenditures other than Of amount
paid to beneficiaries. This method of
transacting business, the commissioner
says, Is to be condemned, especially in
mutual company. Without receipted
voucher for each expenditure it is i'm
possible to make proper examination of
the financial condition of a company. He
requests the officers hereafter to procure
receipt in each instance.
In a resolution passed JAN S, 1894 the
commissioner finds ground for protest.
This resolution provided for an increase
resolution, says the commissioner, docs
to $75 a month and $40 a meeting; and the
resolution says the commissioner "dces
not appear in any of the literature Of
the company or in the bylaws, and mem
bers in general had no knowledge of its
adoption" He believes that for attending
meeting once a month"; which is the
stated period, consuming but little time,
the compensation is entirely too much
for the services rendered. He requests
that the resolution be rescnded and the
bylaws amended to provide for fixed
amount to be paid each member that at
tends the meetings and not otherwise.
Attention was also called to evident
failure to enforce a bylaw which pro-
vides that a member who is absent from
meetings six months shall have his seat
declared vacant and a successor appoint
ed. The records show that one member
of the board had not attended a meeting
in a year and a half, and enforcement
of the regulation is requested.
Pursuant to a resolution adopted Jan.
g. 1899, the officers were directed to issue
new forms of policies, to be known as
the guaranteed option and the "ordi-
nary life to be based upon the stand
ard experience tables of mortality with
interest at 4 per cent. The commissioner
held this rate sufficient under normal
conditions.
The company, however, retains In the
new policies a clause providing for as
sessments provided the funds on hand
should not be sufficient to meet the
claims, and the commissioner requested
that this clause should be placed plainly
after the policies of loan value, paid up
or extended insurance clause on the
policies, that the policy holder may not
be misled in any way. He holds there is
no objection to the clause, which is a
safety provision, provided it is properly
understood.
The articles of incorporation give the
board of directors the power to amend
the same at any meeting. In the opinion
of the commissioner articles of incorpora-
Of 1nh Ao;o
lawfully amended by a majority vote of
members at an annual or special meet
ing called for the purpose.
Under present conditions of election Of
the board of trustees it would take six
years to bring about a change in policy
or management, The board consists of
five members, each elected for a term Of
ten years, an election of one occurring
every two years at the annual meeting
of members, To displace a majority of
the board would, therefore, require six
years Members of an organization of
this character, says the commissioner,
are acting in a dual capacity Of insured
and insurer, and should be given every
opportunity to have a voice in it's man
agement. He recommends that the term
of office of trustees be reduced to five
years, with annual elections, ana rna1
all amendments to the charter and ar
ticles of incorporation be made at meet
ings of members.
No criticism is offered as to the salary
of officers, and the commissioner finds
the business Of the company economically
administered.
The articles of incorporation of the
company provide for a guarantee trust
fund to be used only for death claims
This fund now amounts to $350,00O, and
there is little prospect of a change in this
provision, as it can only be made by a
unanimous vote of the members.
Some of the petitioners had an idea
that the amount credited on the future
premiums of those who accept the new
policies is to be taken from the guaran-
tee fund, but the commissioner states
that it is taken from contingent fund
The amount allowed is based upon the
equitable interest the policy holders have
in the assets of the company
Since the adoption of the new plan of
insurance the officers have devoted all
their energy to effecting an exchange of
policies, and consequently but little new
business has been written. Since Jan.
there has been written 100000 of new
insurance, and there has lapsed SO, O00. 900.
making the net reduction $4,000 900. or
from S24,000,000 in force Jan. to $20,OOO.-
600 July l.
1t is recommended that $4,000 of the
$128,000 cash on deposit be invested In
standard securities. There is no imme-