The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-04-21

claims after a conhagration it must inn
mediately make good it's impaired capital
or retire from business.
Mr.. Loeb said that in cases Of this kind
the State Department Of Insurance. was
always lenient in giving companies ample
time to restore their capital.
Attention was called yesterday to an
other provision of the New York law. the
significance of which is not appreciated
outeide Of insurance circles. II lie called
the safety provision, and it lie practically
impossible for companies complying with
1t to fail. But such compliance is optional
with each company. The safety clause
was cited by L. D. Garrett, an expert or
insurance companies finances, when he
was asked If there was any danger OF the
New York companies being ruined by the
disaster.
THE majority Of the New York COM
panies," replied Mr.. Garrett, are operated
under the provision Of sections 100. 13l and
1872 Of the insurance law known to insurance
men as the safety fund law. These com-
panies are required by that law to main
tain a special reserve fund, which is de-
posted in Albany with the superintendent
Of Insurance, and a guaranty surplus fund
OF equal amount but not deposited with the
State department. The companies are re-
quired TO reserve all their profits above
certain prescribed dividends permitted by
statute until the aggregate Of these two
funds equals the capital stock. In the
event Of a confegration such as Ia now ~
progress in San Francisco the guarant.
surplus fund can be used In pay claims.
If that is not sufficient to paw the claims
the general surplus and the capital, too,
if necessary, must be applied to that pur-
pose.
The special reserve fund on deposit at
Albany is then turned over to the corpora
ton as new capital with which to resume
business and to protect the holders of
policies other than those involved in the
~oonfagration. It ia therefore impossible
for companies operating under the provi-
sions Of these sections to be rendered in
solvent by any fire, no matter how extensive
it may be. No other State in the Union has
such a law.
The policy Of the New York companies
has been 80 conservative in the matter of
dividends, however. that there is no ques-
ton that their general surplus funds will
be ample for the complete settlement OF
all their San Francisco claims without
any help from the capital or from the
moneys on deposit in Albany
The statistics of the three largest New
York companies Of interest in connection
with the speculation about San Francisco
are:
Continental surplus over capital and iaoiii-
ties. IS, 4o4. 225: reserve for reinsurance, So
1877, 1888: total liabilities. except capital, So
$40. an: total assets. si6.3s4,5o 500; premium
income from San Francisco business last
year, $33, 1885.
German American surplus over capital
and liabilities, SAP, SIS; reserve for rein
surance, IS. PCS, ss4; total liabilities. except
capital, s6.l 100. SAC: total assets. sl4.o5?.5?l;
premium income from San Francisco last
year, 44,589,
Home Fire Insurance Company surplus
over capital and liza iliti $500, sol; reserve
for reinsurance, 81 1893. DOL; total liabilities.
except capital, 50. SIS, S52; total assets, ST.
2se, ohs: premium income from San Francisco
last year. ss9.779.
The so-called margin Of safety which
insurance men generally accepted years
ago was that the surplus should at least
equal ne-third of the reinsurance reserve.
OF the thirty-two foreign companies
doing business in San Francisco ten are
so hard hit that it is feared they will have
to r~einsure their "unburned risks after
paving the San Francisco claims and retire
from business altogether. II is not ex-
pected, however. that any of them will
become insolvent and go into the hands OF
receivers. Their surplus funds will be
used UP completely and, as one insurance
man put it yesterday, they will not be able
in their crippled condition to hold the o
fidence of their agents, 80 they may as
well give up the struggle,
OF the seventy-three American companies
involved it is estimated that the number
that will not be able to weather the storm
will be less thar ten, but two or three OF
them are expected to fail without paying
San Francisco claims. 1t was laid dow
as a general rule, however, yesterday that
all companies that nave been reasonable
in dividend payments will pull through.
Fire insurance dividends range all the way
from 10 to 90 per cent. A company in
Ireland once paid 100 per cent.
The two missing factors which must be
determined before an accurate m
of the insurance loss can be made are the
minute description of the burned area and
the amount of risk reinsured by each COM
pany. The three big companies taking
reinsurance exclusively and doing no direct
business with San Francisco property
owners are the Munich, the Rossia of st.
Petersburg and the Salamander. No in
formation concerning their liabilities In
the present disaster has been received, but
practically all their business concerns the
~congested business section, which has been
wiped out, Their losses, therefore, in pro-
portion to premium Incomes are greater
thar those of the other companies.
The companies which are the worst suf-
ferers, though not necessarily the least
able to bear the strain, are, naturally, the
local San Francisco companies, the Cali
fornia and the Freman's Fund OF San
Francisco with it's subsidiary concerns,
Their loss is twofold. The claims against
them will be heavy and large portions Of
their assets in local properties have been
destroyed.
The extent of their liabilities in the pres
ent Are is indicated by these statistics OF