Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-10-24
INSURAN CE INQUIRY
ACTUARY OF THE MUTUAL COM
PANY ON THE STAND.


NEW YORK. October 24.-Emory Nc
Clintock, actuary of the Mutual Life In
surance Company, was expected to answer
questions before the insurance Investigating
committee when it resumed It's sessions to-
day, as to why the dividends of the COM
pany had decreased while the salary OF
President McCurdy was being increased to
$150,O00 a year. In previous hearing the
counsel for the committee produced letters
from policyholders of the Mutual Life In
surance Company complaining that the div
idends of their policies had been greatly
reduced since 1876
One New York city policyholder wrote to
the counsel for the committee that his pol
icy in 1876 drew a dividend of $5576, but
that the dividend had been gadually cut
until in 1904 the policy received but 50 as
dividend. The writer inclosed statements
from the companys reports and declared
that the reductions were made in the face
of increases in the company's reserves year
after year
TO all questions on that point President
McCurdy in the hearing on Wednesday re-
piled that he was not fortified with the in
formation required. but that 1t could be
obtained from the actuary Of the company.
When pressed for an answer Mr.. McCurdy
question. He did not admit however that
he did not know.
McClintock on the Stand.
Mr.. McClintock was the first witness to-
day Mr.. McKeen of counsel to the COM
mfttee. who has made a study of the tech
nical points of life Insurance. conducted the
examination of Mr.. McClintock The wit
ness said he had been an actuary of va
rious companies since 1868 He became
actuary of the Mutual Life in 1889. He was
president of the Actuarial Society of Amer
lea from 1895 to 1897, and has been fell
low of the Institute of Actuaries of Great
Britain since 1874
~ Mr., McClintock supported the statement
made on the stand by John A. Mccall
president of the New York Life Insurance
Company, as to the causes leading to the
many failures during the early days of
insurance in this state. The companies
failed. said Mr.. McClintock, because thew
had nothing to support them but the cur
rent premiums The Metropolitan Life In
surance Company, the witness continued,
was nthe verge of failure at one time
but managed to prosper by adopting the in
dustrial plan of insurance.
The Three Big Companies.
The three big companies. the Mutual,
Equitable and New York Life, the witness
said, were able to comply with the rules of
the state insurance department by reason
of having sufficient reserves. He thought
the reserve requirement of the NV York
aw as 1t stood prevented the formation of
many new companies. The law, he
thought, was defective in giving no leeway
for the expense Of procuring new business
Mr.. McClintock said he favored having
no law governing the reserve, but such
supervision as would verify the statements
made public. Publicity, he said. was the
hact lou md ha
look after itself in the way of its pro-
lection in these matters. Asked how far
his views in this respect were shared by
other officers of insurance companies, Mr..
McClntock said he was somewhat of a
missionary In this matter"
Mr.. McClintock said he thought the state
insurance department should keep at dis
lance and not conduct close examina lions
in the company's own offices.
Mr. McKeen asked: Would not trouble
occur before the public have time to see it
ccning?'
LAS a matter of fact the British COM
panies are managed safely and conserva-
lively and no mushroom companies ever
survive there" Mr.. McClintock replied.
In reply to Assemblyman Rogers Mr. Nc
Clintock stated he did not believe In legis-
lation against assessment companies. as
that might create prejudice against the
regular life insurance companies.
The Mutual Life Insurance Company's
charter called for a division OF profits
among the policyholders every five years,
previous to 1885, he continued. In 1912 a
dividend was added to the policy. The next
division of profits was in 1853 and this
dividend was payable at death All the pol
tcyholder knew was that certain amount
was added to his policy, which ne was to
receive at his death. In 1853 and 1858 other
divisions were made. Witness was not clear
as to whether they were paid in cash upon
surrender of the policy.
In the sharp competition between the New
York Life Insurance Company and the
Et, uitable Life Assurance Society, with the
Mutual Life Insurance Company, 1870. the
Mutual offered new policyholders a thirty
per cent rebate on the first years premium
This. Mr. McClintock said. was an open,
public and avowed rebate. There was so
much objection to this that in 1878 the Mu-
tual Issued policies at fifteen per cent re-
duction in rates. Outstanding policyholders
were privileged to avail themselves of the
reduced rate, but with a reduced dividend.
Mr. McClintock said 1t was one of these re-
duced rates policies that was under obssr-
va ton last week, when the letter of the
holder to the committee was read to Mr..
McCurdy reciting gradual reduction from
$3.50 to 50 in dividends.
Complaints From Policyholders.
Mr. McClintock said that there were more
complaints from these policyholders than
any others the company had Senator
Armstrong then asked why the policies
progressively drew less dividends as they
grew older, and Mr.. McClintock said that
the rate of interest thirty years ago was
Oh per cent which was distributed to pol
icyholders. Twenty years ago 1t was per
cent, and 1t has been progressively dimin-
ishing every year. until 1t was 4 $40 per
cent at the end of 1903.
e Today the company Is giving credit for
lilo per cent. which. he said, exceeds the
credit given by any savings bank The
policyhelder. however. only gets what ~
above 4 per cent. THE policyholder has
been getting dividends for a number of
years and sees them getting SO small that
he naturally worrIes," said Mr. McClin-
took. But that interest decrease has got
to happen in every company. Neverthe-
less. he does not like It. and cannot be ex-
pected to-
Mr.. Rogers of the committee asked: s.If
It dropped below per cent would he owe
you something?' and Mr.. McClintock re-
piled: The law won't permit that"