Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-08-12
ON INSURANCE COMPANIES
Unnecessary for Security to British
Policyhoiders.
OPINION OF LEADING ACTUARIES
Some of the Suggestions to the For
eign Companies-British Trustees
Highly Desirable.

LONDON August lin view of the evil
dence they have heard. the committee does
not consider that In the interest of British
poIicyholders ii Is desirable to compel for
eign companies to deposit funds In this
country.
Thus the select committe of the house
of lords appointed to inquire Into and re-
port on what steps should be taken, by the
deposit of funds or otherwise, to provide
adequate security to the British policy
holders in life Insurance companies which
have their chief officers outside of the
united kingdom, but which carry on busl-
ness in this country, sums up Its finding.
The committee found almost unanimous
opinion among the leading British actuaries
and life insurance managers against COM
polling such measures on the part OF the
foreign companies
The reasons advanced by the insurance
, men are that II would be contrary TO tine
principles In regard to insurance companies
which had hitherto prevailed In Great Bit
ain; that 1t would violate the principle tnat
the whole of the funds of an insurance CON-
pany should be available for the claims OF
all policyholders alike: that 1t might iead
to reprisals on the part of foreign govern
ments: that It might lead the public to be-
Neye that the soivency OF the companies
making the deposits was guaranteed by the
government; that such deposits might seem
to imply a statutory basis for valuation,
the tendency OF which might weaken
rather than strengthen the reserves, ana
that such deposit of securities would appear
to give an unfair advantage to British sub
jects holding policies in a foreign company.
while under such limited state of super
vision 1t was doubtful whether the policy
holders would be well protected as they
are by control through publicity and the
freedom which exists In regard to British
companies.
Tenor Of the Report.
The report says that although the COM
mfttee cannot recommend that any obliga-
lions be placed on foreign companies to
which British companies are not liable. In
Its opinion. foreign companies should be
placed as far as possible in the same posi-
ton as British companies They should be
made to comply with the requirements of
the life insurance companies act of 1870.
which insures a full measure OF publicity
of the accounts Of the British life insurance
companies and gives ample legal remedies
to policyholders.
The deposit of 100000 which the act
makes obligatory on the part Of any new
company. foreign or British. prevented the
formation of mushroom companies. Dut
under the act 1t Is permitted to withdraw
this deposit as soon as the premiums
amount to $500 900.
The committee feels that II this amount
could not be withdrawn 1t would AFFORD an
absolute guarantee to poNcyholders OF al
ways being able to proceed against COM
panies In the courts OF this country. The
committee, therefore. recommended that
every company should be required to main
tain this deposit of 800 900 permanently. 50
long as it's policies continue outstanding In
this country.
British Trustees Desirable.
The committee also feels that the ap-
pofntment of British trustees to act for
foreign companies Is highly desirable not
only IN the interest Of polscyholders. but In
the interest of the companies themselves
Believing in the fullest openness of ac-
counts, the committee recommends that all
Insurance companies, whether foreign or
British, be required to furnish the board
Of trade with full revenue accounts, balance
sheets and valuation statements of their
business. showing at the same time the
expenses for management, and that, further
the board be empowered to vary from
time to time the forms OF questions insur-
ance companies are called upon to answer
and of the returns made by them. and also
to insist that the answers be in every re-
spect complete and accurate, and also on a
return to make 1t clear how far the funds
OF any foreign company are subject to
preferential claims in any country in which
II transacts business
The amount Of its foreign business and
the business actually transacted In Great
Britain should be carefully distinguished. In
conclusion the committee considers that 1t
is most desirable to prepare a statement
market value of the securities held by
them