Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1903-08-03
THAT SURPLUS ruling
It Will Be Fought In Courts
Companies Don't Want
to Distribute
ANNUAL DIVIDENDS EXCLUDED
Annual Dividend Paving Companies
Not Involved, But SO Per Cent of Pol
icies Are on Deferred Dividend Plan
Wisconsin Law Says Companies
MAY" Make Certain Distribution.

Chicago, August 3.-The ruling of In
sin, that mutual life insurance COM
panies doing business in that state must
make division of their surplus among
their policy holders at least once In
five years is regarded as important by
all life insurance men, chiefly as 1t
paves the way for a judicial ruling on
a point which has long been agitated.
A lawsuit is bound to ensue.
The great majority of life insurance
policies are on the deferred dividend
plan the portion of the company's sur
plus belonging to the policy being paid
only in case the policy is in force at
maturity. That is the method of the
Equitable, against which proceedings
were brought, while some companies
apportion the surplus at various peri
ods but do not pay it over. There are
also many companies that operate on
the annual dividend basis. and which
this ruling would not touch. The Equit-
cies to those who prefer them but offici-
ais in Chicago offie say that not one
in a hundred is issued on that plan,
as the returns to the policy holders are
so much better on the deferred dividend
basis.
Vice President Gage +. Tarbell of the
Equitable Life Assurance society said
in New York yesterday that no appeal
to the courts would be made from the
decision of Insurance Commissioner
Host, of Wisconsin, that mutual life in
surance companies doing business in
Wisconsin must distribte their surplus
among policy holders at least once in
five years. Mr.. Tarbell said:
The decision is viewed as wholly
unsound and at variance with all jul
deal expression and with expert life
insurance opinion. The question will,
of course be taken to the courts, which
are after all the only medium through
which a satisfactory construction as to
the meaning of statute can be sought.
1.-THE effect of the decision, if sus-
tanned, would be that all companies
would be compelled to write their poli-
cies so that dividends should be paid
withstanding the preferences OF the
policy holders for some other mode of
distribution ana the provision of the
companies policies. The decision ar
fects all companies alike and If sus-
tanned will cause them to change the
practice In that, state that they have
followed since 1870"
The question turns on the interpre-
tation to be made of the word may
IN the Wisconsin law governing the
distribution of surplus. 1t is as fol-
lows:
Every life insurance corporation do
ing business in this state upon the
principle of mutual insurance, or the
members of which are entitled to share
in the surplus funds thereof, may make
distribution of such surplus as they
have accumulated annually, or once in
two, three, four or five years, as the
directors thereof may from time TO time
determine. In determining the amount
of surplus to be distributed there shall
be reserved an amount not less than
the aggregate net value of all outstand-
ing policies, said value to be computed.
by the American experience table of
mortality, with interest not exceeding
AZ per cent.
Commissioner Host says that may"
is mandatory, and not permissive, and
bases his ruling on that point. The
question is of interest in Illinois, as the
statute in this state is practically iden-
teal with that of Wisconsin. as is the
law in Missouri, North Dakota, and
Oklahoma. In all these cases the stat
ute seems to have been modelled after
that of Massachusetts. even to the
wording, except that the Massachusetts
law says the company ''shall" make
distribution of its surplus in certain
Ways.