Albuquerque citizen., 1908-01-06
PR SIDENT Says COM
M|SSIONERS HAVE ERRORtD
Charges That They Ignored Legal
Difference Between Assessment
and OLD Line Companies DE
ClareS That Policy Holders
Are Well Protected.

New York, N. Y, January e.
President Archibald C. Haynes. of
the Mutual Reserve Insurance COM
pany. sharply criticised the methods
of the state insurance department
yesterday and practically accused 1t
of trying to have the company ad-
judged bankrupt regardless of the
law. Supt. Otto Kessey, of the de-
partment, turned over to Attorney
General Jackson on Dec. 81 a report
of his examination of the company,
which showed it to be insolvent If
the ordinary course Is followed the
attorney general may bring receiver
ship proceedings against the COM
pany, which, 1t is declared. would be
a calamity to its $1,000 policyholiers
many of whom have been paying
premiums for fifteen years or more
and are now too old or have physical
disabilities which disbar them from
Insurance in other companies.
President Haynes said:
THE examiners of the insurance
department treated the Mutual Re-
serve as a legal reserve or an old
line Company and not as an assess
ment company, which II is. The COM
pany was reincorporated several
years ago, but this change did not
alter its status as an assessment COM
pany A month ago the United
states supreme court held that the
rtincoFporatIon did not change its
status as an assessment company but
simply extended its scope so IL could
do an old line business.
This decision has a most impor-
tant bearing upon the report of the
insurance department, and means
that IL its findings are ever taken in
to the courts they Will not be up
held.
THE difference between an assess
ment company and a legal reserve
company Is this-an assessment COM
pany does not have to maintain a
legal reserve while an old line COM
pany does.
"under the law regulating assess
ment companies we could have
$100,00O.OOO OF outstanding insur-
ance and $1O,O0O,OOO of unpaid death
claims and we would still not be in
solvent. We would have six months
in which to assess the policyholders
for the money necessary to pay the
death claims. Then at the expiration
OF the six months IL the money was
not forthcoming and the death claims
remained unpaid the company could
be legally declared insolvent.
The Mutual Reserve has about
5000 assessment policyb bolders and
1900 old line or legal reserve poll
icyholders. Against our old line busi-
ness we are required by law to main
tain a reserve of about $1,000, 900.
As matter of fact we have assets
OF between $4,00O,O0O and 5000, 900,
of which the cash assets exceed So
10000. Against our assessment bus
iness we are not required by law to
maintain any reserve. but we have a
reserve against 1t nevertheless.
81 cannot uderstand the motives
of the examiners. Last August they
accepted $4,000 as the value Of
our real estate leases. In November
they arbitrarily cut this down to
S5O,200, the estimate OF an outside
appraiser They also object to the
liens on policies. A company doing
an assessment business is required
by law to levy assessments or liens
on its policyhOlders to provide the
money 10 pay the maturing death
claims.
"Supt Kelsey has not given his Of
iicial approval of the findings of his
examiners, but instead hands their
report over to the attorney general
When Mr. Jackson examines the law
] am confident he will find against
the report and i'm favor of the COM
pany,"