New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-10-26
MUTUAL TO CLEAN HOUSE.
Continued from, first page.

Ne,,fn,
wear 81 .eoe policies Of 1899 were listed AT
..a.,,-;,, ,-,l,,a of ssS3 81 In addition to the
ST 600 OF the policy. Then there seemed 10 no
nee, lapse of four years in the books ana III
7na3 ,,reciselv the same sort of pohcE "o'
,istad as worth I'm expectation s'''o'i' Jus
ST. ca less This same policy in the i''4 o''N
Of the same sort was worth SS2S no. ana IN 'i'e
current year from the latest volume, inquiries d
worth 1901 81. This indicated that the NaiueS
could not have been reckoned on the Valia''e
factors of mortality. rate Of interest ana o'''Ti
similar elements. but purely and simply o" So'ie
arbitrary law.
The significance of all this lay in its effect
upon the arguments that have hitherto been
sdduced as to the immense value and the IN
Waived character of the actuarial work thdt II
was based on the experience of the compah! On
figured through many years and similar at
An1ents when il turned out to be true 'ia' 'iie''
estimates were based upon rough estimates
This SEINE element Of inaccuracY Where
mathematical preciseness had been eNPeoteu
Was strtkinslv shown at another point. namei!'
In the estimating of the dividends 10 the poli''
holders In the course of his examination MI
Hughes asked about the amount eaI"eu i'
; ,5t,sidsnds over expenses in 1903 After some
figuring Mr. Mct'lintock estimated that this was
$50 per cent but followed this up ny Cie uee
laration that the dividends to the pohc6 toiNe'
were calculated the basis of a return III III
terest of Al per cent. The element OF h'>es
u1ent expenses which apparently could not NC
fixed by any known process and are thereioie
estimated by the Connecticut State ofnclais a'
a ratio of % of / per cent. entered into these
calculations. In 1902 the amount PAID was Oh
the basis of B per cent. but the actual return
mr., ,none~ of the Mutual showed less than A.
per cent In other words. in both these years
,he Mutual distributed to its policyhoders more
than II actually received in return for its Varl-
o1,s securities and Investments and other re-
turns
DIVIDENDS NOT CALCULATED
The defence of this method. according to Mr..
Mec1intock lay in the fact that while THESE
vaccinations in return were large in some years
IN the average the interest receipts exceeded the
dividend payments But back OF this 1usuiioo-
.ion Law the main revelation. namely that these
dividend rates matter Of judgment not
of exact calculation To use MT. Mctlntock
own words It was not q matter OF caio"iali'i'
so much as one of "retrospection and prophecy.
Hardly less significant was Mr. McCfntockS
testimony regarding the cost of new insurance
and the rolling up of vast new business as
material factor in the decrease IN the amount
of dividends paid 10 policyholders. Mr. Nc
fylintock's first explanation of the reason foT
the steady decline in the dividends TO policy
q holders was that it resulted from the decline IN
the interest rate Pressed to the discussion OF
g reduction in a specific year 1903 he cited a
decline in value of securities Of SS.'noeHt But
Mr. Hughes turned TO his own testimony to
show thst there was q recovery of 100000
the next year without any further change in
the rate of dividend or any increase as a result
Then Mr.. McCIintock frankly testified that
while the future might contain benefits from
nm increase in the business in the proportions
row sought and realized. get the present effect
might he injurious. He did not even deny tnat
the cost of increasing business might in point
ef fact prevent the payment of any dividend i
II too rapid.
This tailed perfectly With his morning testt-
rrony about the need of limit on the amount
Of insurance that any company ought 10 be al
lowed TO write He testified that tne Legislature
had several times been asked 10 Ak limit Of 81
tga 600 coo first; then 81 100000 600 and finally
Of a much larger sum. Ar McClintcck declared
II there to be limit forced row i would
have to be still higher But in the main. Mr..
Nc(Iintock's explanation of the decline IN the
return to policytolders based upon the de
cline in the rate of interest. which. he be-
lieved had about reached low water mark
He recited the history of the numerous
attempts to pass bills fixing this limit in amount
of business. recalling a bill introduced by SEN
ator Bracket n 1901. Apparently. George w
Perkins and other insurance men thought better
OF their notion of a limit. and the project was
dropped In the course Of his examination Mr.:
McClntock discussed variety of phases OF
technical insurance. and his examination was
not finished the time of adjournment. when
Mr. Hughes had just begun the questioning about
the way the varying maturity value OF policies
was fixed. He will be recalled later.
Mr. McClintock testified in regard to deferred
dividends. This form of policy had been con-
demned IN the famous Frick report. While con-
ceding some justification to the criticism. Mr..
MeClintock insisted that their weakness or
strength depended upon the management of the
company. and that the remedy for abuse lay
in publicity. At this point Mr. McClntock paid
significant tribute to the committees work
by saying:
Il think the future of the insurance business
Will be as favorable as now His optimism ex-
tended to belief in the increase in interest
rates. and he declared that the great insur-
companies would be able 20 meet their
obligations even If the interest rate fell to ,
per cent He defended the company's reserva-
rion of the right to fix the dividend at the end
of a deferred dividend policy's life. declaring
that any other method would result in chaos.
MR. oDELL WILL APPEAR
Following the announcement published ex-
clusively in Mondays Tribune that the legis-
lative life insurance committee had decided
That Ex-Governor Benjamin B. Odell should
testify before it came the news yesterday that
Mr.. odeIl had been asked TO hold himself in
readiness TO testify Mr.. Odell. it is understood
has assured the committee that he will testify
Willingly and cheerfuy.
Argument the EquitabIes demurrer to the
suit of Colonel j. Wilcox Brown looking to a
receyership of the society has been set down
for November Is As the result of the recent
visit TO Europe of j De Forest Junkin. Colonel
Browns Philadelphia counsel it is considered
entirely likely that English and French policy
holders H'ill ask TO be made parties TO Colonel
Browns suit As told exclusively in The
Tribune recently. it is understood that Mr. Jun