Daily Kennebec journal., 1904-08-13
THE INSURANCE BUSINESS.
As Money Maker II is Not What 1t
Used to Be.

principal fire insurance companies
Of Hartford, once known as the
home of insurance" The speaker
sat on the porch of his hand
some summer residence overlooking the
sound. II was a home that spoke of
both the wealth and culture of the
owner. Riding at anchor in the ofting
was his handsome steam yacht, ana at
mis- porch stood the thirty-hOrse power
motor carriage Of a fashionable En-
ropean make He was trying the rest
cure" and was in a reminiscent mood.
Time was. and it was not so very
long ago, either. when the holding OF
a few shares of fire insurance stock IN
Hartford companies meant sure anu
constant income sufficient for the wants
Of th.. man whose tastes We're not over
luxurious." he said. My father was one
cf the piolt.rs in the business, as ne
WAS also in that Of life insurance, anu
the fact that he left pretty sung for-
tunes to al Of his good sized family oi
children tells that he made no mistake
when he decided that there was money
"a, he mace. in the new venture. Fire IN
surunc.. particularly, caught on AT One
Rates were stiff, risks scattered anu
well restricted expenses slight, as
tb,re was no advertising necessary ana
,ractically no competition. Such
thing g a manufacturing concern SS'-
tematically insuring Itself was not theii
heard Of and all was plain sailing ioi
the pioneers,
THE very first year Of business snow
Cd that insurance was money iiidhei.
In one of the companies, in when sun
hold the stock my father took. there
was n call of 10 per cent. from the orlSi-
nal subscribers when the business De
gan That was for nfhce equipments
,rfntine. Incidental expenses ana
small hank account rs starter. Ih'l"
never was q cali for the 80 per cent. Dbl
oncn of stock subscriptions. Yet pre-
vious to the big Chicago ana i''st"i'
fircs--thc first big s"tbaCkS the lnsul
ance companies had-ther" had beef re-
Turned to the original stockh"iders "i
this country several hundred per cent
in dividends. 1t WAS the best set-lP"
uuick' scheme that the shreWd YANKEES
uf ttose davs ever met up with.
"rhc story Of that company is IN ci-
foct the story of four or five more "l
,t tI,rtfnrd nionpcrS in the business
I'm, fine nrOfts were rather less, as the
elder company got big snare "l lhF
busiuess. There was profit enough f"r
all especially during the days OF 'h''
civil War. when the good-sl%ed sur
rluses that had accumulated We're
available for all sorts of @ilt-"dgcd IN
y.Stm.ntS at such rates OF interest," "9
we shall probably never see asalh-
rates that enabled the company mah-
agcrs to .!ouhlr and r"double th"lr sur
ulIs while keeping on a very 'oiiS'rNh-
tive insurance business that actudhS
.ntalI-d very little in the way OF FISK.
II was Il business that had the very
tu,ch of Midas in it. and made every
one who held stock rich. Money WIS
60 scarce and 50 much needed IN 'he
West that it loaned at rates that W"uhh
now seem wildly absurd. ~, l. ana even
4, ner cent. and always with what Eattr
,yovcd to bc even better than hrst-ciitSs
collateral MS security
"Diftcrrnt today? | should say So
And il has been different for now nearly
!, quarter of century. The West Is
n,,v Ioaning instead of borrowing
NANCY. Hartford for a long time. just
after the big fire there. practically hhd
= mortgage on the entire city of 'hi'a-
~ hnsi,es having / similar first cali
ON about half tho farms of the Who'll"
stotc Of Illinois. Instead of insurance
rieks seeking the companies. as then.
tn" companies agents seek IN" ltlSu'
ancc now, and rates ar" at Surh n 10"
.bl, that a company That can earn any
sort of a dividend and add littl" I" llS
surplus is extremely fortunate. '"np"-
tition became hot after the big hreS III
Chicago and t:oStnn in two successive
wears. in which our companies mc'
LOSSES dollar for dollar. without impair
ing their capital materially. thou%h II
vired out the ir surplus and wiped out
lot of the small and new ANA weak COM
panirs that had sprung up AT the S'ih
time. Hut because the older compihtS
stood ,he loss and cam" up Smillh% t"i
another round. the English companies
concluded that there must he a l"t ol
money in the game here, and cam" II
"a competitors. cutting rates ana tax
ing most any sort Of a risk at first II
order TO get fuothold. They pros
,rr,a while the American companies
were getting back on their feet again
and finally. after years of Cut-throal
business there was an agreement OF
rates, and all the rest IN tn" way ot :
business under standing that brou%h
about peace and conservative methods
and smaller profits all around. with tn
absolute necessity for enormous cApi
tai and Il l,ss liberal distribution q
prnfits and surplus to stockholders. IN
DAYS Of 100 per cent. dividends were
past. hut my sire had been wise enough
in his day and generation to get in on
the ground floor. and his profits av"rag
Cd several thousand per cent. on ever.
dollar of his original Investment. for il
many cases he gave his notes for stocl
subscription instead Of putting up cash
He never had to meet those notes. f"
the profits were sufficient to not onl
meet them at maturity, but leave hin
q handsome margin.
Mutual insurance as carried on ny TN
various mill owners and factory pr"rri"
tors in New England. where the mil
managers saw there was chance TO
cheaper insurance. has been one Of tn
chief factors in cutting into the profits
the fire insurance companies OF recen
wears and making the stock OF the com