The daily sentinel., 1907-07-22
WHY THEY
QUIT STATE
Mr.. RITTENHOUSE
of State Insurance Com
mission Makes interest
ing Statement Regarding
COmpany's Withdrawal.

The following most interesting bull
letin regarding the withdrawal of the
Columbian National Life Insurance
Co, of Massachusetts, from the state
of Colorado, has just been issued for
publication, by f. f. Rittenhouse,
commissioner of Insurance of the
state.
To the Public:
Withdrawal of the Columbian Ma
tional Life Insurance Company, Mass
achusetts:
On July s. 1907. this department
addressed list of seventeen inter
rogatories to this company calling for
information regarding the operation
of its associate corporations and as to
the dividends earned for policyholders
and stockholders. On July 10. 1907,
the formal withdrawal of this COM
pany from the state was received
through the mail. but replies to the
inquiries have not yet reached the de-
partment.
A brief reference to this company
will be interesting and instructive be-
cause, although the department has
succeeded in ridding Colorado of ad-
visory board and agency stock
/
operating with the same methods are
planning to gain n foothold in this
state.
The Columbian National Life com
menced business in 1902. Its organ
ization later consisted of three cor
porations, viz: a Securities company,
which owned the control of the in
surance company's stock; an Agency
stock company. which undertook to
| tI,r fre fttn nf tho
| insurance company; and the insur-
ance company itself. Stock was sold
or optioned to prospective policyhold-
ers and others to induce and influence
| business.
Large profits we're expected as a
result of economies to be eifected by
doing n large volume of business in
short period of time, and by using
the profits of the Agency company to
nav dividends to the stockholders. It
was the expectation. of the large prof
its that was to induce the large bust
| ness from which the large profits
were to come.
This department, doubling the wis
dom and fairness of this plan, In
| April. 1906, asked the company
which had already entered Colorado,
| to do no business until its methods
were more fully understood. The COM
many made no explanation and made
no attempt to do business, although 1t
| remained in the state ready to do so
at any time.
A recent examination of this com
| many by the Massachusetts, Insurance
department disclosed the fact that the
Agency Stock company had failed ana
ceased doing business, owing the in
surance company S563, ,3S7,06 which
II could not pay and which loss fell
upon the company. and, of course,
upon the policyholders. No bond
was required by the company, all
though an arrangement was in the
contract to provide for such protec-
ton. The insurance company, there
fore. made new agency contract
this time with its owner, the Securl-
ties company.
many to this department prove. that
instead of the three-corporation-p
and the stock schemes reducing the
cost of placing the insurance upon
the books, the cost was excessive
These sworn statements show;
1. That S3S.110,646 of insurance
was in force on December 81, 1906
2. That the stockholders had paid
in S1.0O0.000 in capital and $43S.-
S11.27 in contributions to surplus
the latter for the purpose of paying
the expenses of the company and to
4 guard its solvency.
3. That on December 81, 1906, the
surplus over capital and other iabil'
1 tiles was $44T733.S9. of which SASS ,
S11.37 was contributed by stockhold-
ers and not earned by the company.
4. That for the four years of It's
existence the following dividends
i have been earned:
Paid pollcyholders .SlO 'SSS-lu
/ Apportioned policyholders. ....
/ Apportioned policyholders,
L ....' ...... ....-.... l'fo - J
\ Paid stockholders ....... 76,11O.SS
Net surplus on hand earn
l ed and not contributed. S's22.52
Total ..... $97 40 o;
During the fourth year of its ex
| istence G9O6l, the amount of pre-
miums apportioned and received fol-
/ expenses was S457 ,071.97, while the
amount actually spent for expenses
was S1,312, 2,469.56, making a tota