The Montgomery advertiser., 1905-11-09
INSURANCE BY RETAIL
INDUSTRIAL POLICIES so CHARAC-
TERMED ny HEGEMAN. W.
nnvestiGation Of the New York COmpa-
MES In Again Taken Up-Actu-
airy McC1tnfock of Mu-
tual Testifes.

New York. Nov. SIN the testimony
OF John r. Hegeman President OF the
metropolitan Life Association, before
the investigation committee upon the
resumption Of the insurance investsa-
tton today. 1t was brought out that the
industrial insurance was considerapy
more expensive than other forms OF HE
insurance. and Mr.. Hcgeman. aiter
CHASING Industrial insurance as retah
and the ordinary life as wholesale IL
Illustrated the fact by an example IN
which for a stated age 1t was SHOWN
that for $1,000 policy of ordinary ire
the Metropolitan charged 1850 annu-
ally, While for 1884, the nearest amount
OF the stated age under the inoustriai
plan. 1910 was charged.
Mr.. Hegeman was IN the stand the
greater part of the afternoon ana MS
testimony was along the line OF the
company's insurance business.
At the morning session Emory NC
Clintock, Actuary of the Mutual Life.
who has been examined in part at a
previous session as called and con-
tinued his testimony on technical in
surance.
Money for New Business.
Mr.. McClintock could not remember a
case In which the actuary's department
has ever been consulted by the officers
of the company as to the amount Of
money to De expended for new business.
He said he hal beer consulted on sew
eral occasions as to the commissions of
agents. He was Of the opinion that
the agents Commissions were larger
for the endowment policies than on an
ordinary life policy with annual divi-
dends. The only justification which
Mr.. McC'intock offered for this method
of paying comInisi ions was the customs
of the insurance business and the La
bility to disrupt the agency force IL it
were not followed.
Mr.. Hughes asked Mr.. McClintock:
.'In 1908 the smount realized by the
company was s5,563,S6i ard the amount
of dividends paid was $735.o47; in 1904
the amount realized was $6.624,677 and
the amc unit of dividends paid $685.
Why, when the amount realized was
over a million more. was the amount
set aside for annual dividends nearly
$500, 900 less?'
Mr.. McClintock said that the reduce
tion of interest must be taken into ac-
count. He also said that as the esti-
mate for the years earnings was made
in November and as the dividends to
be paid were calculated on the estimate,
1t was impossible TO get accurate re-
suits.
In reply to questions Mr.. McClintock
said that one Of the factors considered
in computing the DIVIDENDS was the
loading" OF the premiums SO as to pro-
vide funds for the conduct of the COM
pany. What remained of the load
fngs" after payment of expenses, he
sail, was devoted to dividends. The
amount of the 'loadings' was fixed by
the expei fence of previous years.
Loading" Expenses Unknown.
Witness did not know how much of
the loading" expenses was applied to
dividends and had never tried to find
out.
Mr.. McClintock was asked If there
was any way the cost of procuring
new business could be lessened He
replied that the company might adopt
new method of valuation. He said
the ratio of expense to the total in
come of the actual life insurance was
20 per cent for the year 1904. This,
he said. is also true of the New York
Life Insurance Company and the Equit-
able Life Assurance Society. In small
Ter companies the ratio was much low
err, in some instances as low as 10 or
/ IA per cent.
The ratio of expense to the amount
paid to policyholders of the Mutual
Life was shown to be 40 per cent. In
| the New York Life 1t Is the same, while
| In the Equitable 1t is but 43 per cent
| In some smaller companies 1t is as
| low as 20 and 80 per cent.
Hegeman Takes stand.
Following Mr.. McClintock, John r
Hegeman, president of the Metropoli.
tan Life Company, was called to con-
tinue his testimony where he stopped
two weeks or more ago.
| Answering Mr.. Hughes. who wished
1t for the record, Mr.. Hegeman told al
greater length than his previous tes-
timony the growth of hie company.
| In 1887 the company had a surplus
of $S63.352. and at the end of 1904 Il
was $14,S35,741. At the end of 1881
the outstanding insurance was $152,-
BLOT. of which $147S5S.2S7 was in
| dustrial. At the end of 1904 the out.
standing insurance was $l,470,2S1,2S1
of which $1,127.SS9,229 was Industrial
The premiums paid in 1887 amounted
to $5,61S.767. and in 1904. $50,s0s,924
| Witness then Identified the table OF
weekly rates for various ages and said
| the aggregate rates for a year of in.
dustrial insurance were greater thar
ordinary life because the industrial
| was retail insurance, while the ordi.
nary might be characterized as whole
| sale.
An example was taken at an age o.
22 years and 1t was shown that tn,
Metropolitan sold a $1,000 ordinary lif,
policy for $685. annually, while foI