The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1906-07-23
Observation-Disclosures
lalnSCompany'S
Situation.

10 be received by the direct In
surers of San Francisco losses
and the absence of salvage 10 realize
upon after the great San Francisco
IRE have caused the Fireman's Fund
Insurance Company directors TO decide
TO wind up the affairs of the Home
Fire and Marine Insurance Company,
all of the stock of which is owned by
the Fireman's Fund.
Some time aRO the Firemen'E Fund
Corporation formed and this
marked the end OF the Fireman's Fund
Insurance Company as an active factor
In underwriting, the rev corporation
taking In all the new business OF the
old Ffreman's organization.
When the fire came the old Fireman's
Fund had 100000 in capital and So
100000 in net surplus. The Home Fire
and Marine Insurance Company had
100000 capital and net surplus OF
100000. The conditions that followed
the fire. in the language OF w. J. Dut-
ton, president Of both OF these cor
porations, could not have been more
malign as regards insurance COM
panies IL they had been expressly de-
vised TO work ruin"
At first the companies that carried
direct insurance counted on receiving
100 cents on the dollar from the
reinsurance companies. That would
have enabled the Fireman's Fund, so
President DUtton says, TO have met all
its losses In full. The reinsurance
companies. however, very early began
10 show that they would avail them
selves OF the earthquake clause OF any
other clause behind which they could
avoid making payments.
Then il became evident that the Fire
mems Fund could not weather the storm
without making herculean exertions. It
haf haH -
business 10 lay an assessment on the
stock OF the Fireman's Fund to aid the
Home Fire and Marine Company The
directors thought that they might by
helping the Home Company provide
means for carrying the business OF the
Fireman's Fund along.
Unfortunately. the early expectations
about finding a large amount of salvage
were disappointed. Then the reinsur-
Rnce storm. Of which some mutterings
have been heard. began to rise more
and more menacingly. A meeting OF a
large number OF reinsurance companies
IN Germany, France and Italy prepared
an agreement that was signed by them
al, in which they gave notice that they
would adhere strictly to tic letter OF
their reinsurance policies AID warning
the direct insurers that they would also
hold them to the letter OF their con-
tracts with the reinsurers.
An account of this movement was
given exclusively in Tho Call st the
time. Then the reinsurers in England
and elsewhere, including many COM
panies IN the United States, began TO
send out marked notices that they had
caused TO be inserted in Eastern and
European insurance Journals making
claims OF absolute exemption for pay
ment on the ground Of earthq Jake
clause. and for dynamite and back h-
ing. The meaning OF all this war clear.
There was no alternative, so President
button says, to dropping the Home Fire
and Marine Insurance Company from
The active list and trying TO make as
good a settlement as possible for that
the same course that circumstances had
enforced upon the Fireman's Fund.
What the best settlement that can
be made" signifies was explained by
Mr. Dutton yesterday. He said:
We shall dispose Of all the property
and give policy-hOlders the advantage
OF the entire proceeds. There will be
no payments on any policies by us until
sets are disposed Of The Fireman's
Fund has not paid dollar yet to any
policy-holder. The Home Fire and
we know just what we have IL would
not be fair to pay any one. We do not
know yet what the reinsurers will pay
20 US on our policies. Every one must
bo treated exactly alike.
BOOKS AND RECORDS LOST.
We might have gone along with the
Hone Fire and Marine Insurance Com
pany by letting people suppose that all
premiums on new business to be Sc
cured and have instructed our agents
20 get all the business they could II
that course had been taken, the result
would have been that the premiums
would have been used TO pay losses and
the Home Marine and Fire Company
ri " m NJ W
ing any other losses that may take
place
clearly I said that the Home Fire and
Marine Insurance Company must stop.
( We have had a reputation during many
years for fair dealing. That reputa,
ton must be maintained now and shall
be
Mr. Dutton was asked what policy
holders in the old Fireman's Fund In
sursnce Company and also those Of the
Home Fire and Marine Insurance Com
ipany might expect in the way of set
Elements. He replied:
. I cannot say. We will allow the old
lFireman's Fund Insurance Company to
iuse all its resources TO pay Its losses
we cannot tell how much can be real
lied in that way. for we have no def
mite idea OF the amount OF reinsurance
that will be paid by the other insur-
ence companies with which we piaceo
insurance. We have lost all our books
and records and do not even know
what the companies are or the amounts
reinsured by them, TO which we must
look. We are trying to get from all
the fire insurance companies all the In
formation we can, but they are busy in
adjusting and making settlements and
long time may pass before We have
all the facts.
The old Fireman's Fund Company has
been selling its securities and getting
money to pay losses II the reinsur-
ance companies would come up and
pay as we at first supposed they would.
there would be no question that the
policy-holders of the Fireman's Fund
Insurance Company would receive 100
cents on the dollar. Now we do not
know what we viii be able TO pay. Our
purpose in paying over 100000 to the
Home Fire and Marine Company was
20 keep the capital stock Of that COM
R9Ry intact
ABSENCE OF SALVAGE.
When the statement concerning the
losses IN San Francisco was made up
Grst our judgment was that the losses
OF the Home could be paid in full. Our
opinion was that the losses of the
Home could be settled for less than
S1,200,0O0, after allowing for salvage
on the basis Of ordinary insurance eX-
perience. II appeared then that the
losses OF the Home would be 100000
more than the net resources.