Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1907-03-07

sion that an annual accounting be made to
policyholders.
No recommendations were made bearing
upon foreign insurance companies except
those which prescribe certain provisions
which may be in every policy and those
which forbid the putting of certain provi-
sions In policies.
The committee reports that on the whole
1t found that the companies under investi-
cation have been carefully administered
their funds generally well invested and
the salaries OF their officers not so high
as to require restrictive legislation.
! The Mutual Benefit Life Insurance com
pany was found to be a purely mutual
company and to have shown a steady and
uninterrupted growth. There is little sug-
gested by an examination of this company,
says the report, which calls for any ctiti-
eism or reformatory legislation.
The committee has no special recon-
i mendations to make. with respect to the
case of the Colonial Life Insurance Com
pany of America the funds Of which IL
says. appear to be carefully invested, or
/ the North American Life Insurance COM
pany of Newark. The latter company was
| organized only about a month ago.
work of Prudential.
TDe report an extended review
of the Prudential from the time Of its or
ganization in 1873 underSthe names of the
| widows and Orphans Friendly society.
with share capital of s25,OOO until the
present when, as the Prudential Insurance
I Company Of America, 1t has a capital stock
Of 300 900 and a surplus of SlS,5SO 900 Tho
report says:
] 1t is claimed that this surplus beloncs
to the stockholders, subject to contingen:
20, rIrlA
from the presidents testimony that Ger.
tainly in the past and in the present some
| at least of the stockholders would IL they
could, divide this surplus, or part of II, in
the shape OF cash OF stock dividends The
case presents remarkable state Of affairs
BY the investment of $91,0 in cash three
stockholders were enabled to accumulate
stock OF $20OO,000, wherein they have al
ways drawn n1,,, 10 81 per cent or $4,000 per
S165OO,OOO. Nor is this all So rapid were
the gains and so great the prospect of their
future accumulation that in 1902, when the
scheme for reciprocal control Of the Fidelity
and Prudential companies was in course OF
arrangement the stockholders of the Pru-
shares at six times their par value and the
principal 2. omoters Of the comp ny actually
received for a part only of their holdings
Fidelity Trust company $5,997,0O0.
:. Surplus In Trust Fund.
For the shares which produced this
amount there had been paid into thu treas
society By the promoters only S45,5S4.OS. or
three-quarters Of per cent of this vast
II the theory OF the stockholders be cor
rect that the surplus OF this company in
law belongs 70 them, the present surplus
the SOL. 900 contributed to the enterprise,
and this in addition to annual dividends Of
$2O0,OOO, or 2ls per cent paid for many years
The assets of a life insurance company
are, tEust funds and the management Of
management of great trust. While It may
be- true, as a strictly legal proposition that
the obligation Of the company to policy
holders are limited by the terms. Of the
written contracts OF policies which it is
sues, yet it is not the whole truth; and
the Prudential company itself has recog-
nized that it's obligations, In equity and
good conscience, go further. for they state
among policy holders in excess of its legal
obligations, more than 100000
The truth is that this vast accumulation
si25, 600 was all contributed by and in
ethics all belongs TO the policy holders,
operations just and liberal return to the
promoters of the enterprise. While the
vested rights OF the. stock holders. what
ever they may be, of the Prudential COM
rany must be recognized and maintained,
we cannot contemplate without some
an aH''G enormous surplus by this Complain W
taken from millions of contributors for
whom the company is the trustee, If this
few stock holders. whose reward OBJ
tanned under the companys charter have
already been so great. II the stock holders
interest In this corporation Is what some Of
them claim II TO be Il may well be doubted
whether they cannot prevent the voluntary
contributions out OF the surplus TO the
policy holders which heretofore have been
made from year 10 year TO the extent OF
100000; and II may well be supposed
that the time will come at no distant day,
when the pretensions OF stock holders may
again bring forth from them demand for
the division of this surplus
Accumulation Must BE stopped.
II has been stated before us that at the
| present rate of progress this surplus Is
likely 20 be, at the end of 1907, SO, 600 600 and
the end of 1908. S2s,0OO0O0. This money
ought In some way to be assured to the
policy holders, except such part now
belongs to the holders of stock. Rather
than allow this accumulation to go on for
tie benefit of the stock holders at the ex-
We would be I'm favor OF the repeal OF the
charter OF the corporation, and reorgani-
zatlon of IL under the general law and
under proper restrictions, II such a meas
ure seemed necessary. but the committee
does not think that such remedy Is
necessary and they believe that the invasion
of any Just rights OF the stock holders
can be. avoided. and yet that the assets
can be substantially retained for the policy
holders.
1t is. in place of this extreme measure
that the committee prepared the bill
limiting the amount OF capital stock of any
insurance company to 100000 and restrict