Daily capital journal. (Salem, Oregon) 1903-1919, 1910-09-30
SHAWNEE
COMPANY
JUST QUITS
TURNS OVER ITS INSURANCE TO
THE NATIONAL AND WITH
DRAWS FROM BUSINESS IN
STOCK TO PREVENT FIRES.

One of the best examples of the
evil of the ver-capitalization and
the watering of the stocks of fire
and other insurance organizations
throughout the United States, which
has come to light within the present
decade and which has caused such a
furore of excitement, unrest and in
security among the benefciaries of
such corporations N the country Is
that of the Shawnee Fire Insurance
company, of Topeka, Kansas, which
has failed and has filed notice of
withdrawal with Insurance Commits
sioner Kozer from the transaction
of further business in Oregon, which
notice was received yesterday after
noon, and is of record of p. m. on
the date of September 20.
The risks carried by this company
in this state, however, have been re-
insured in the National Fire Insur-
ance company, of Hartford Connect
lent but the losses that were In
Cured and not paid by the insolvent
company prior to the hour of the
date specified may not be subject to
recovery by the holder of policy in
insolvent company beyond the
amount of the surety bond which
has been placed on file with the In
surance Commissioner and is Of
record in the Office of the state
treasurer in the sum of $4,000.
Since this company was only
licensed to transact business in this
state July /, 1909, its annual report
year has not expired and there Is no
record or report on file with the in
surance commissioner to indicate
the amount of insurance this COM
pany has secured in this state but it
is supposed to have been large.
Irregularities in the conduct Of
the business of this company by the
managers are directly chargeable to
its failure and it is the first of the
companies to have secured a license
to transact business in this state un-
der the law of 1909, which reduced
the old requirement of a deposit of
security of $4,000 in cash, to a
$4,000 bond in the name of any
legally authorized surety company IL
the United States. Every insurance
company has taken advantage OF the
law authorizing them to substitute
surety bond in lieu of the former
cash deposit, and the only recourse
that the policy holder in any COM
pany has, in the event of loss in
Cured in the interim between the
suspension Of business and the re-
insurance assumed by the succeed
ing company, is in the amount of
the surety bond of such companies
which, in the event of a serious
catastrophe, would leave them in the
lurch.
In commenting upon the "irregu,
lar methods" pursued by the Shaw
nee company in the transaction and
management of its insurance huei-
ness throughout the nation, Bests
Insurance Reports, in the Septem-
Der issue of 1910, says:
This company was incorporated
and began business October l5
1895, and succeeded the Kansas
Farmers Fire Insurance company
of Abilene, Kansas, a mutual com
pany organized in March, 1882, AT
the end of the year 1895, followint
the reorganization, its surplus was
. but $2.799 During 1906 its capita
stock was increased from 100000
to 100000, and 100000 addi
tional surplus was paid in. The
premium income was more thar
: doubled in 1907 and the volume y
q business now written is very larg
= in proportion to its comparativel.
limited net resources. This is al
undesirable condition"