Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-09-24
FIRE INSURANCE RATE
FACTS AND LOGIC AGAINST
HIGHER CHARGES.
Earnings and Dividends Of the Great
Companies in the United
States.

The question OF fire insurance rates is
momentous one in Philadelphia, as well as
in the District of Columbia About two
weeks ago the Allied Business Organiza-
tions Of Philadelphia. consisting Of repre-
sentatives Of the board of trade, grocers
and importers exchange, lumbermen's ex-
change, commercial exchange master build
ers' exchange, Franklin Institute, Trades
League, the bourse, ct" Square Club, drug
exchange, Manufacturers Club. Hardware
Merchants and Manufacturers Association,
Philadelphia Chapter Of the American In
st.tute Of Architects and the Engineers
Club, formulated a report refuting the ar
gument advanced by the Philadelphia Fire
Underwriters Association that the recent
advance in insurance rates was justsfed by
reason Of the losses incurred by the stock
fire insurance companies.
Within the last few days the insurance
committee of the Allied Business Organiza-
tions has prepared report on the ten-years
record of Twenty-Five millionaire American
companies which appears to confirm the
contention that the business Of the COM
panies has not shown the losses claimed.
Capital and Profits.
The report says, in part:
ION December 81, 1891 these companies
showed capital and surplus amounting to
s62. 425. O53. On December 81 1902, after
paying dividends amounting to $43, AS. $50,
the capital and surplus amounted to $751;
372, 035.
ION December 81, 1891, the capital and
surplus Of these companies, as stated.
amounted to $62, 425 ,053. The reinsurance
fund upon the same date amounted to $42,-
$40, 432. and "a per cent, or 103O5, 7Q, OF
this fund represented profit previously
made. The capital accumula ted profits and
"a per cent of the reserve fund combined
makes total investment Of S72, 100 1877
Giving this sum the credit Of earning per
cent per annum from investment in securi-
ties, 1t may be assumed that a part of the
dividends or 500 1903 was derived from
this source. Deducting this amo~nt from
the total profits, the remainder is: Under
writing profits. $44, 73s, $50.
I'm other words, the total profits, or $73,-
s1;62s, avtraged 91A per cent per annum Of
which percentage per cent, or $50, 092 303,
was investment earnings and 6h per cent.
or 50. 1853 was underwriting profits.
"Of the twenty nine millionaire companies
five paid decreased dividends and twenty
four maintained dividends at least as large
as had been paid In any previous year Of
the period under consideration. OF these
twentyfour companies eight paid the same
rate OF dividend throughout each one Of the
ten years, while two increased their divi-
dends.
Companies Making Money.
''Of these twenty nine companies twenty
five increased their total capital and sur
plus during the ten years, while four de-
creased their total capital and surplus, but
this latter was due in part to paying larger
dividends than were earned Only two-the
Delaware and the Orient-failed to make an
underwriting profit. One company only
the DelaWare-lost enough to fall out Of the
list OF millionaire companies. In the mean
time ten companies that on December 81
1881, were not millionaire companies have
by accumulation Of profits been added to
the list, so that, instead of twenty-nine.
there are now thirty-eight American mil
lionaire stock fire insurance companies
The net premiums received in the ten
years by these twenty-nne companies ag-
gregated $6O8,345977: the total income.
1854, 49,, 951. The total expenses, other than
dividends and losses amount to SOD, O72,-
234 and the losses paid in the ten years,
plus all losses incurred but not paid,
amount to 1861, 7S7, 1873. Expenses consumed
362 per cent of the net premiums, while
said losses consumed 59.4 per cent. Were
the marine business eliminated it would be
shown that fire expenses consumed at
least 80 per cent of the fire premiums.
IAN average advance, equaling about SOS
per cent increase, was obtained in 1901
compared with 1900. due mainly to re-rating
under schedule Had this much advance
over and above the premiums actually Sc
cured been obtained in all the other nine
years, from 1892 to 1900 inclusive, and had
these extra earnings been added to surplus,
the profits, with an investment earning
per cent for an average Of five years includ-
ed, would have added about 500 .0OO, 900 and
increased the profits Of $40, S3O, 623 to about
$102, $50, 623.
No Need for Increase.
at IL conceded by brokers and others,
speaking for the stock companies, that the
additional advance in rates being put into
effect in 1902 all over the United States will,
because Of preferred business and previous
ly re-rated risks. only procure an average
advance Of to 8 per cent. II this much
more. II in addition to the 2-3 per cent
advance, the premiums for the ten years
had been per cent still higher, and had
these profits been added to the surplus in
vested, the profits Of the companies would
have been increased still further from
$1O2, $50, 1923 to $50 $50 ,623, an increase Of
$4S, 100000. In calculating this increase,
the additional premiums are credited with
earning per cent interest per annum for
an average OF five years.
Dividends upon capital stock averaging
from 10 to II per cent have been paid every
year, and IL per cent Is the average for
forty-one years. The dividends paid for
1900 averaged Ills per cent. That the net
profits earned for ten years have averaged
about 9h per cent upon both capital and
satisfied with this, the companies are en-
deavoring to obtain rates Of premiums,
which will realize 1S per cent and upward,
net profits per annum."
POISON RY CHLORAI.