The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1905-05-03

growth of the company has been
normal one, not factitious or forced,
be comfortable to the law of demand,
and supply"
You state that the Equitable Life
Assurance Society has a surplus of
$500, 900. most Of which is of no
service to the policyholders." The
facts are, the Equitable Society has
q surplus of only $50, 494, $1,000. This
surplus, however, includes all the di-
vidends which have been withheld
from it's policyholders during the past
have been covered into their surplus
account. These dividends are in
reality, not surplus at all SO far as
the company is concerned, but are an
actual liability against the company
They belong to the policyholders. 1t
is their property and will be paid
to them when their tontne policies
mature. The Equitable has admitted
assets of $412,43S,3S100, but of this
amount 1925, 523, 1900 is the reserve
or the cash value under the policies,
which reserve is accommodating from
year to year to mature the policies
which the company has in force. This
reserve or cash value under these
policies can be Withdrawn by the
policyholders at any time. The Equi-
table has policies in force amounting
to 495,542,89200. This is a liza
biity or an obligation, which the
company has got to meet sooner or
later. and in order to meet this tre-
mandouS liability of a billion and a
half, it takes $326,523, 1900 which,
placed at interest during the expected
life time of these policies, to mature
this tremendous obligation If the
Equitable Society had less than
$326,523,12600 in admitted assets, it
would at once be declared insolvent
by every insurance department in the
United States Yet you state in your
article that the Equitable Life As
surance Society has a surplus of
$400 000,000.00, most of which is of
no service whatever to the policy
holders"
It seems to me when you read
these plain facts which could have
been obtained so easily by consulting
with the Insurance Commissioner Of
our State, or any even moderately in
formed insurance man, you Will at
once see what a great injustice you
are doing the inslEing public. and
can but think that you will gladly
make the correction.
You are correct in your statement
that every dollar of the surplus be-
yond the amount necessary to mature
the policies should be divided among
the polcyholders, and that the price
of insurance should be reduced to an
amount that will prevent piiing up
an unnecessary surplus That is
exactly what a large majority Of the
old line, conservative life insurance
companies are doing today. The great
companies like the Northwestern, the
Mutual Benefit, the Penn Mutual, the
Connecticut Mutual, and many others
are all purely mutual companies.
They have no stockholders, and every
dollar of profit over and above the
necessary expense is divided annually
in the form of dividends to its policy
holders. These companies are furn-
ishing insurance to their policyholders
at its actual cost. These companies
are as prudently and economically
managed as any institutions in this
country.
The great mistake which the as
sessment companies have made is
that they have piled up liabilities
without piling up corresponding as
sets to meet these increasing liabili-
ties. You make the mistake in not
discriminating between the assets OF
a company and its surplus. You talk
of its assets and make it appear to
the public that il is a surplus. Take
he Mutual Benefit, for Instance
which has $4,000, 100000 in assets. 1t
has only little over $5,000,OO0.O0 in
surplus, and yet this company has
1868, 100000 insurance in force. The
conservative life insurance companies
like those which | have named above.
have all contended for the past thirty
years that the surplus over and above
a reasonable amount to safeguard
the welfare of the company, should
be distributed annually to its policy
holders
Have you endeavored to ascertain
the cause of the Equitable squab-
BILE" as you term it? 1t is because
Mr.. James II. Hyde owns a controll |
ing interest of the stock of this great
corporation You have been advocat-
ing the formation of stock companies
in this and other States, and these
companies may ultimately he in the
same condition that the Equitable is |
in. You advocate one day. the mu-
tualization of the Equitable Society
and q distribution of it's surplus, and
the next day you advocate the for
nation of stock companies. The |
greatest and best life insurance COM
panies in the world today are purely
mutual companies. They have no
stockholders and such a condition |
as you now term ''the Equitable
squabble" could never occur with
these companies.
There is as much difference in life |
insurance companies as there is in
men. A great and good man inn
presses mis- personality on any COM
pany with which he is connected, and
when you say that all life insurance
companies are alike, you make as
great mistake as you would in say
ing that all banks are alike. or that
all newspapers are alike.
JOHN C. DREWRY.
Raleigh n. c., April 27, 1905.
1.-THE News and Observer is not