Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1907-03-06
REFORM STRIKES
JERSEY STATE
Important Action Taken to
Regulate Business of Life
Companies
RESTRICT STOCK AND DIVIDEND
Four Large Companies Under lnves-
tigation-WouId Limit Capital to
100000 and Dividends to 10 Per
cent-committee Claims Business
Of Companies is Legitimate.

Trenton, March 6.-Many important
recommendations for the regulation OF
life insurance companies in New Jersey
are included in the report of the select
committee of the senate appointed last
year to investigate the subject of life
insurance in the state made public to-
day.
The committee has drawn freely
from the report of the committee OF
fifteen. which was submitted at con-
ference on uniform insurance legisla-
ton last December The greater part
of the report is devoted to the Pruden-
tial Insurance Company of America,
the largest of the four companies under
Investigation. Principal among the rec
concentrations is one that a bill be en-
acted limiting the amount Of capital
stock which any life Insurance COM
pany may have to $2,000,000, and divi-
dends which may be paid therein from
future earnings, so long as the COM
pany continues to conduct a partici-
pating life insurance business, to ten
per cent upon the stock; providing that
upon dissolution Of the company the
stockholders Of the company shall
ton OF the assets, not more than ST.
100000 for the face value OF their
shares.
This bill provides. however, that
where accumttlations greater than
that amount already have taken place
Gas claimed in the case of the Pruden-
tial) the stockholders shall not be de-
prived of their rights thereto. The
committee reports that, on the whole,
it found the companies under investi-
cation have been carefully adninis-
tered, their funds generally well in
vested and the salaries of officers not
so high as TO require restrictive legis-
lation.
Earnings Are Enormous.
The report contains an extended re-
view of the Prudential from the time
of it's organization in 1873 under the
name of the Widows and Orphans
Friendly Society, with a share capital
of $25,000, until the present when, as
the Prudential Insurance Company of
America, it has a capital of $2,000,00O,
and a surplus of $18,580,000.
"The case presents remarkable
state of affairs" says the report. "By
an investment of s91,00 in cash, three
stockholders are able to accumulate a
capital stock of $2,OO0,000 whereon
they have always drawn 10 per cent, or
100000 per year, and still to accumu-
late beyond that $16,5O0,000. 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
course of arrangement the stock
holders of the Prudential We're able
to dispose of shares at six times their
par value, and the principal promoters
of the company actually received for
their part only their holdings in No
vember, 1902, from the treasury of the
Fidelity Trust Company, $5,997,000.
For the shares which produced this
amount, there had been paid into the
treasury of the Widows and Orphans
Friendly Society, by the promoters,
only three quarers of one per cent of
this vast sum of money. If the theory
Ol ullc SIOShhOl0Olo . NC So1ASSS, SAAe1I eAaS
surplus of this company in law be-
longs to them, the present surplus of
SIS, $4,000 affords $2O4 for each dol
lar of the $4,000 contributed to the.en-
terprise and this in addition to the an
nual dividends of 100000, or 219 per
cent paid for many years past. 1t has
been stated before US that at the pres
ent rate of progress, this surplus is
likely to be, at the end of 1907, s23,000,-
900, and at the end of 1908, $2S,000,-
900.
This money ought in some way to be
assured the policy holders except such
part as justly now belongs to the hold
ers of stock"
"It was to prevent the above men
toned accumulation, that the commit
tee prepared the bill limiting the
amount of capital stock of any insur-
ance company to $2,O00Ooo, and re-
stricting the profits of stock holders.
Ian nIAMoNns E0p nINNEp