New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-03-07
WOULD LIMIT CAPITAL
INSURANCE REPORT LAW.
Versey Committee Suggests NesU
Regulation of Companies.


insurance in the state. which made public to-
day. In its recommendations the committee has
drawn freely from the report of the committee of
fifteen. which submitted at the Conference
on Uniform Insurance Legislation last December
Tho committee % fifteen was appointed at a con-
ference OF Governors Attorney Generals and in
surance commissioners at Chicago February J.
1896. The report which that committee made has
been adopted practically in its entirety by the
select committee with certain changes required
by altered conditions in the companies under in
vestigation.
BY Tar the greater part OF the report is devoted
20 the Prudential Insurance Company OF America
the largest Of the four companies under nvestiga-
ZION. Principal among the recommendations IS one
that law be enacted limiting the amount OF cap
ital stock which any life insurance company may
have 10 100000 and the dividends which may be
paid thereon from future earnings long the
company continues 10 conduct the participating life
Insurance business. 10 10 per cent upon the stock
and providing that upon the dissolution the
company, the stockholders Of company shall
have, out Of the ultimate distribution of assets
more than two dollars for of the face value OF
their shares.
This bin provides. however. that where accumu-
lations greater than that amount already have
tal1en place las claimed in the OF the Pruden-
tiaD the stockholders shall not be deprived OF
their rights thereto whatever those rights may be.
GOVERNOR To APPOINT DIRECTORS
Among other recommendations were: Provisions
Cor The appointment by the Governor Of three d.
Tectors Of every stock life insurance company these
directors TO be persons having interest in the
stock Of the corporation: limiting the amount OF
stock which any insurance company may hold in
any other company 10 Is per cent OF the whole. and
that where company holds than the amount
limited II shall dispose of the excess within five
years: providing that life insurance company
shall invest more than cent Of its own assets
IN the stock OF any other corporation more than
N per cent OF its assets in bonds OF any
corporation; restricting child insurance: requiring
more detailed statements Of the affairs Of insurance
companies TO bring ABOUT more publicity with re-
spect their affairs; requiring the examination OF
Insurance companies al least once in three years,
the examination TO be brought more Immediately
under the direction OF the Insurance Commissioner:
prohibiting contributions 10 political campaign
nittees; that after January l. 1905. domestic
company shall write both participating and non
participating policies and requiring all stock
panies 10 elect before September of this year
whether they shall conduct n participating non
participating business after the following first day
OF January, and a provision that annual
counting be made pohcyhoders by classes Of the
portion Of the surplus belonging them and the
setting aside of such apportioned part Of the sur
plus 10 their credit. No recommendations were
mace bearing upon foreign insurance companies.
txoept those which prescribe certain provisions
which must be in poicy and those which for
bid the putting of certain provisions in policies.
PRUDENTIAL REVIEWED
The report contains an extended review of the
1873. under the OF the Widows and Orphans
Friendly Society. with share capital Of $4,000.
until the present, when, the Prudential In
suranoe Company Of America. il has capital
stock OF 100000 and surplus Of S1s5so,OOo The
report says:
It is claimed that this surplus belongs to the
noicVboiseTs - o1ld apreer from the Iresijente
a 49,. 49, Li,llI tiiS
at present at least Of the stockholders would
the shape oe' % cash he or Stock dTdends Is ca5e
presents rsGnarka bic state OF af1aiTs ~ the IN
able TO accumulate capital stock of 100000
s2oo99 year and still 10 accumulate beyond that
Nor is this all So rapid We're the gains and so
great the prospect of their future accumulation I
troi Of the Fidelity and Prudental comPanies g Was
n course OF arFangeneni the stockholders Of this
pose Of shares al six times their par value
ceved for part only Of their holdings IN Novem-1
Der. 1902 from the treasury Of the Fidelity Trust Z
For The shares which produced this amount there
Orphans Friendly Society By he promoters only
S454ss os. or tAree-quarters OF per cent Of this
II the theory Of the stockholders be correct that
theln he present Surplus Of SIS 5000 aforas 500
sor each dollar Of the Sgl9e' contributed to the en-
Of socc per cent paid for many years past past
ASSETS ARE TRUST FUNDS"
The assets OF life insurance company are trust
FUNDS ;, ana i Ihe maRagsnlent Of such company
trust. y hile II may be true as a strictly legal
10 policyholders limited by the terms OF the
written contracts policies which il issues Yet
IS not the whole truth; and the Prudential com /
pany itself has recognized that its obligations In
state thai they have Toanar fS DIVIDED M IoT g6 ney
pOicyhOlders. in excess OF its legal OBLIGATIONS I
more than $7.00D.0O0
The truth IS that this vast accumulation OF
snoneyi nov amounting 20 more than sl25.OO0O0,
tas ali contributed BY and IN ethics all belongs
re POilc. ioldefs aIter a Ialr deduction for the
expenses OF operation and Just and liberal return
- ~ promoters OF the enterprise While the
NerASl ilells q me stockholcers, whatever they
enay be. OF the Prudential company recog-
1lo"t solle Soilc4tuoe me continuous rolling
OF an enormous surplus by this company. taken
pany Is the trustee If this surplus IS To be consd-
cred the property OF "A few stockholders whose re-
slready been great. II the stockhoders Interest
N ms corporation is what some or them claim il
Dus 10 policyLoders ghjcb Eaye ere,of I-ae sII
made from year TO year TO the extent Of s. (OOG1l
and II may well be supposed that the time viii
demand for the division of this surplus
II has been stated before that at the present
sate OF progress this surplus Is likely TO be al
the end OF 1907 S23 100000. and al the end of 1915
&e.0l0O99 This money ought IN some wav TO he
assured 20 the p0licyholders exceut such mari a.
justly now belongs 10 the holders OF the stock.
benefit Of the stockholders. at the expense OF The
poAcyholdefs Of this company. would be in
favor OF the repeal OF the charter the corpora
Tion AMI reorganization under the general
law and under proper restrictions If such a meas
HIe seemed necessary. but the committee do not
mink thar such remedy is necessary. and they
beleEe that the invasion OF amy just rights OF the
stoekholders can be avoided. ana yet that the
holders 'N'
II is in place OF this extreme measure that the
committee prepared the bin limiting the amount OF
capital stock OF any insurance company 10 $4,000
and restricting the proats = stockholders
-s-