New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-10-12
.HOTCHK|SS ISSUES REPORT.
Many Inquiries Received Regard
ina Protective Holding Co.
ATTACKS PROMOTION PLAN
inaccuracies in Insurance De
partment' s Figures, an on-
derwriter Replies.
rBy Telegraph to The Tribune.

TBv Telegraph to The Tribune.
A,b.rr oc+ - In line with the cru
sade against the promotion of insurance
connanies recently started by Super1n-
tendent Hotchkiss. the state insurance
Department issued q statement to-day in
the form Of report on the Investigation
of the Protective Holding Company, OF
Syracuse. and the proposed Protective Fire
Insurance Company. Of the same place IN
which some of the early methods OF SELL
ing stock and promoting the latter com
nanv through the Protective Holding Com
pany were criticised.
The report stated that more inquiries
have been received concerning these COM
panies than as to any of the so-called
holding and promoting corporations now
operating in New York.
This is doubtless due" the report said.
ito the wide geographical extent Of the
promoting operations of the Protective
Holding Company and to the ambitious
plans of the promoters. whose first pros
pectus put before the public a farreach-
ing scheme to dominate several great COM
panies, which, combined. would write
everything in insurance"
The Protective Fire Insurance Company
is yet only a name. the report said, it hav-
ing received a certificate of Incorporation
from the state. the funds with which il
is TO be supplied, through the promotion
of the Protective Holding Company. being
as yet far from sufficient TO permit the
completion of its organization
Holding Company Organized
The Protective Holding Company was
organized and began business in Novem-
Der. 1909. with an authorized capital Of
100000. the stock being divided into
&C, 600 shares of $40 each. 1t was first
under the management Of Ira \. Manning.
an insurance promoter of experience, aC~
cording to the report. and active methods
were employed to place its stock through
stock statesmen. Later the Manning plan
Of selling stock was given up and the
mail order system adopted under the man.
agement Of Wightman & Dudley, of New
York Mr.. Manning severed his connec-
ton with the company after the Insurance
Departments Investigation began. and he
is now contemplating the promotion Of a
fire insurance company in New jersey. the
report stated
This promotion has as its centre" the
report said, the Robert +. futile Under
writing Agency. a fire insurance concern
operating from Syracuse and. aside from
the very garish methods of the specialists
who We're employed TO place the stock
with investors. seems 10 be founded on an
intention to organize and conduct large
fire insurance company. and, should the
same succeed. 10 organize and conduct in
surance companies doing other lines or
business. all of which would be controlled
through the Protective Holding corpora
ton
within a week after It's organization
the holding company entered into a con-
tract with the futile underwriting agency.
whereby it granted to such agency for Il
period of fifteen years the absolute con-
troll Of the underwriting business of such
fire insurance companies as should be con-
trolled by the holding corporation"
Strong exception was taken in the report
to this contract. and when it was brought
TO the attention of the company the con-
tract was changed and the period of time
Cut down TO one year.
The original prospectus of the company
was severely criticised in the report as
grossly misrepresenting the facts to pros
pective investors" and when this criticism
was brought TO the attention OF the com
pany another prospectus was issued in its
place. concerning which the report said:
The New Prospectus.
The prospectus which is now being
used, while somewhat more truthful in the
particulars indicated. is still characteristic
of promotion methods and should not be
relied too implicitly by the investing
public"
The financial exhibit Of the Protective
Holding Company. Incorpora ted, in the re
port showed that the company has placed
It's outstanding stock, the sales so far
amounting 10 s2lG504. at cost TO investors
Of between % and % per cent of the money
subscribed, or about - per cent of the
money paid into the surplus. Under this
heavy expense the report stated that the
company now has cash assets amounting
10 only $25.263 and subscription notes
amounting TO S45.196. The report. however.
commends the present methods of selling
the stock and gives the new regime credit
for endeavoring 10 reform the business so
as TO overcome the criticisms of the IN
surance Department II said in this re-
spect:
Realizing that the method Of selling
stock by means of personal interviews had
been costly, the management on May /
1910, adopted the plan of selling the stock
70 the public by mail This plan. inaucu-
rated by the agency Of WiEhtman & Dud-
ley. has resulted in a reduction of the
total expenses of selling the stock TO about
Is per cent Of the gross amount Of sub
scrptions-"