Clinch Valley news. [volume] (Jeffersonville, Va.) 18??-2019, 1906-05-11

tiements-When Securities Have to
BE LiquisIated.
San Fraucisco's great fire has direct
ed attention 10 the manner I'm which an
Insurance company goes about 10 set
tie IA huge loss bill. says the New York
Post Although the companies are
abundantly able to pay and many OF
them possess very heavy bank bal
ances. the adjustment OF claims calling
for the payment of $1J0,OOO,OO0 or
more represents u financial operation
OF sufficient magnitude to involve rath-
er careful financing. How are these
huge claims TO be met. where will the
companies set their money from and
how long will it take to effect set
uement: These questions have direct
bearing upon the money market and
to u limited extent the future cost of
security prices for such issues as are
usually held by large fire underwriting
corporations.
As soon as Il great insurance COM
pany learns that il will have to foot
the bill for hu-e coufagration its
officials hold hurried conference and
get ut he volume OF their liquid as
sets ana the extent of their combined
ba..k balances. In the case of a large
forci underwriting corporation Its
home o.-ice III London. Liverpool, Man
chc-tcr. E,rl.u or Paris is Immediately
communicated with and a rough esti-
mas ll3>.r OF the probable aggregate
1nrapnI = n
panics Il is = matter of pfkIe to pay
tAe claim; 1T the earliest possible nc
me@t. - the time of the great Chi
ca@o fire IN III. when property valued
at $19QEJO.CoO was destroyed, and q
year later. when the insurance COM
i anics had to pay an $S0.O00,OO0 loss
bill for the Boston fire, many of the
claims were settled within a few days
after the confagration took place.
In the same way the companies did
their best two years ago TO pay the loss.
es OF the Baltimore fire without unrea-
sonable delay. In this way they gained
prestige Within one week after the
Boston fire one OF the largest New York
companies. having dispatched n vice
president to the scene to pay claims in
double quick time, wrote sufficient
volume of new insurance to recoup It.
self for all the losses sustained These
quick settlements involve equally quick
financing. and one OF the features OF
the present movement on the part of
the underwriters TO effect speedy set
Element or the San Francisco losses has
been the negotiation with the home
offices OF the foreign companies for ca
bic Transfers OF money with which TO
meet the claims.
When n loss occurs an Insurance com
pany first HIS recourse TO its bank bal
ances. and when these are insufficient
To meet immediate claims the company
borrows what IL needs Most OF the
large companies have accounts In four
or i've banks. SO that they can easily
secure accommodations In case II is
required. When the bank balances are
insufficient and losses are heavily in
excess of 100000 the company has to
either borrow funds or sell some of
the stocks or bonds that IL has in It's
list of assets. In the case of the Balti-
more fire most of the companies man
aged to pay out what was needed with
out resorting TO any violent liquida-
tons at all Whatever securities were
sold 10 pay the claims there involved
were for the most part sacrificed by
companies that were too weak to bear
the loss and were forced 10 reinsure
their risks with some stronger rival.
This was done in the case Of nine OF
ten companies that had to an extent
ignored the dangers OF what our insur-
ance men call the "conhagration haz-
ard" and accepted too many risks In
the affected area.
In the case of very large companies,
! however, which do a heavy business
throughout the United States ard Eu-
rope as well the perils of the "confia-
grafton hazard are minimized by the
fact that the risks are so widely dis
/ tributed as TO render II almost impos-
sible for any one disaster to entail a
sufficient loss to cripple the company.
Whatever losses are sustained by for
eign companies operating in San Fran
cisco Will have probably to be financed
from the other side, since the COM
panies doing the largest business have
only. an insignificant amount of money
Invested In American stocks or bonds.
For that reason these companies are
not likely to sell any large portion OF
the stocks held in the United States.
The payment of great fire loss is q
very interesting operation. Hundreds
Of men are employed In II and special
adjusters for special risks have TO visit
the scene. 1t will be weeks before the
San Francisco claims are wholly liqui
dated. but within month a large por.
ton of the insurance loss will be set
tied for. While the Insurance com
panies will not pay for earthquake
damage, It will be difficult In many
claims to tell where the earthquake
damage left off and the fire damage
began. For that reason the great fire
companies that were arranging with
their banks for large advances a few
days ago based their negotiations or
the probability of having to stand 6
very large proportion OF whatever
property loss was actually involved.
Carload Of a.