The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1911-02-08
Continued From Page One.

premiums are collected, large amounts
in the payment of death claims, en-
dowments, surrender values, dividends
loans made to the policyholders and
{ Administrator expenses. Ii is often
the case that the amounts so paid in
the individual state are far in excess
of the yearly amount of premiums col
lected from that state. This is bound
to be the case where company mas
been for any number of years doing
business and the settlement of its con-
tract obligations and policy LOANS
equal, il they do not exceed. the pre-
MUM receipts. This is bound to be
she case when a company reaches any
thing like an average business. 1t 49,
of course, not the case with company
recently entering a new territory.
That the movement for compulsory
Investment is based upon a funda-
mental misconception of fact is also
strixinSly' shown by the following:
A careful examination of the official
statements of fourteen important Ire
insurance companies of the country
having investments aggregating ST.
$50 .OOO 900, reveals the very impressive
fact that these companies have now
actually invested in the southwestern
group of states missouri, Arkansas
Texas. Kansas, Colorado, New Mexico
and OkIahoma) an amount equal 20
124 per cent of the reserves held on
al policies outstanding in those states
In the northwestern group OF states
these companies have investments
worth more than twice the reserves on
ell policies outstanding in those states.
with the exception Of few sections
where home capital is abundant the
investments of the companies equal or
exceed the aggregate reserves. In as
certaininE the amount invested In
state the values of railroad stocks ana
bonds owned by the companies nave
heen apportioned according to the
mileage within the state, which seems
an eninently just and fair method.
Furthermore, under the present
forms of policies issued by the large
life insurance companies the polcy-
holder is entitled by contract TO loan
equal at least to so per cent OF the
reserve. The policyholder, therefore,
without any new law, has an absolute
right secured to him by his policy to
a loan of this amount, or TO receive IL
outright by a surrender of his policy.
If the law compels the company to
loan this money to his neighoor-and
that is what the Robertson law does
how is he to get his money when ne
wants it? The answer is, take some
other policyholder's money.
The whole purpose of extending the
business of life insurance companies
into many states and countries is to
get absolute assurance of financial
stability and to prevent the possibility
of insolvency In case of any great
pesti!ence or other calamity IN one
part of the world. In the event OF a.
local calamity, the insurance company
must be SO far in control of all its
assets as to have them available to
meet the demands in the afflicted ter
ritory. Moreover, it is contrary to
every principle of economics TO at
tempt by legislation to compel invest
ments of capital in any one place.
The evil results that would follow
a compliance with the Robertson law
or any similar law, If enacted in other
states, are many.
To mention a few:
The company would be restricted in
its investment TO the securities Of a
comparatively small section.
AS a number of the companies would,
of necessity, be in the market for Sc
curities at the same time, the better
class of securities would be high in
price and in consequence the interest
rate would be below the average profit
rate; or securities of more or less
doubtful value would have to be pur-
chased.
In any event, the profit on invest
ments, upon which company largely
depends for its ability to meet its con-
tracts and to pay dividends, would be
materially impaired. The deposit OF
these securities in the individual state
would deprive the companies Of their
custody, entailing a possible loss
through theft or carelessness or
through the embezzlement of a dis
HONEST official The companies would,
very largely, be deprived of control
over these securities. and could not
readily buy and sell IL occasion de-
manded such action.
The securities could not readily be