New-York tribune., 1908-02-15
MUTUAL RESERTE REPORT
KfIseu Examiners Find Defcie,ccy
of S1,9I7,II4.
rBy Telegraph 70 The Tribune

.f,snv Fen as-Superintendent Otto Kelsey Of
80 Insurance Department made public to-day ms
-epo-t On the Mutual Reserve Life Insurance COM
-srv The report severely criticises the company
s-s shows an existing deficiency Of S.71In4 sS 1t
ssrlsres that liens have been charged against as
easement policyholders Of the Mutual Reserve with
,t -bei- knowledge and without legal tustlhcatlon
ers number of other serious irregularities, Ehlch
bs6 hefcre escaped the notice Of the department
The r.port states that il is the opinion OF the
examiners who made il that the company has
been ho.eessly insolvent since the decision OF the
co,--rs IN the English and North Carolina cases
They .charge that proper accounts nave oeeh
Esn+ r. show what the assessment policyholders
have psid the company. and that this class or pom
cvhoIders has been u1justly Disseminated against
n favor OF The legal reserve class
TIE examiners state il their report; The COM
,en, has issued many forms of policies, containing
diverse methods Of treating the premiums received
tv = the provisions in many cases being entirely
ignored by the company
.-1srrepsncies Of over 100 per cent with regard
:. Liabilities the report says appear in the Cana
dian and New York reports; death claims not
-ronerIv entered upon the claim register, and a
suurierenrsl register. where part OF the claims
are carried and not reported; provisions in poll
cies creating specific liabilities, TO which no at
-e--ic7 has been paid accounting Of the
coapary-sH these have passed the scrutiny OF
5eoar1uerts and legislative investigation without
detection Liens have been placed upon policy
holders without Justification and. worse than al.
without notice 70 the policyholders affected The
racing Of these liens upon the policies. greatly re-
dscirg the insurance under the policy without any
rotioe 70 the poIcyholder, thereby in effect de-
cesvi-g hirr as 10 the amount payable, giving him
nc chance protect his insurance and leaving II
the widow and orphans whom he would protect
to either submit 70 this reduction or be forced 10
await the expensive result Of litigation. is out
rage that cannot he condoned by any excuse that
may II offered-''
Confronted with these facts. the report states
tha1 the examiners believe the interests OF the pol
icyhoders and public demand that report should
once be made Of them
The report shows that liens amounting to
ES54s g which the company carried as assets
should net be allowed The history of their leyyfng
IS gone into in detail and severe criticism MADE
The report also charges the company with making
improper statement Of its reserve liabilities in
that II has never reported the survivorship bonus
portion Of its policies for the valuation or carried
any liability in its statement TO meet this portion
OF irs contract guarantee
Under The head Of litigation, the report states
ths, he oornpany's expenses fer this have been
unusually heavy and the amount Of It unusually
1srge- ard that there 1l3 active suits at the
Present tine.
The Mutual Reserve IS also charged with having
greatly understated its death Claims in its last
report and the report says: There is no excuse
~ this understatement The total underestimate,
i says. amounts 10 sIg755I S. II states further:
4Ae treatment Of death claims by the company
Is open severeEt criticism both in the delay
Il payment ana 81 attempts TO force beneficiaries
70 scae their claims. When the benefciaries have
gore INTO court the company then seems willing TO
fee II more fair Just. and in some cases. liberal
tnaoluls Such were some of the criticisms made
II tAe report ot Nessrs. Hadey and Hughes the
examiners. dated August 30. 1907, which showed
cedct C. s1,59o.sI Il.
The fnsl report, made under date Of November q
ssL Increases rather than decreases The deficit
ne leasehold OF the company Is valued al sdJ@4-
instead o. the coTnpany's own valuation OF S4slOtV
= ALLOWS en item OF cash I'm banks Of s5Zl.3sS 80
ne Mutual Reserves gross assets are put al
sssSs3 . admitted assets. g ol. .6o2 ~ total
Asoiices SzIs.7i7 10; deficiency, $l3l1ll4 E8 Ia
c0ce0 n the admitted assets are premium notes,
msns and liens amounting 81 4so,5z0 90, and out
htsnding and deferred premiums Of $70oS55 S. In
eiuoeo IN the liz nilities unpaid death claims OF
$50 s5
ine death rate OF the assessment class, the re-
fcft says. has been much higher than the average
eao 70 meet deficiencies in this respect special
ols nave been made and in several instances liens
amounting S73s029 e5. placed against the policies
slshout ihe knowledge OF the policy holders