The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1912-07-10
WARNINGS FROM
". c. TAYLOR
PUBLIC or NORTH DAKOTA
WARNED AGAINST TWO CON-
PANlEs SEEKING TO DO Rusl-
NESS IN THIS STATE - THE
LURE OF BIG PROFITS.

ms. Com. w. G. Taylor has requested
The Forum to make public the follow
ing warnings which appeared in his
latest bulletin:
Some time ago this department
issued through the state press, a
warning against the Western Hail In
demnity Exchange of st. Louis, Mo.
the department refused to license this
concern; that it is not authorized to
transact business in North Dakota and
that any n who attempts to act as
agent for the Western Hail Indemnity
Exchange is guilty of a misdemeanor
and is liable to a fine Of $500 for each
offense. Information concerning the
activity of any one in behalf Of this
concern should be sent to the commits
sioner of insurance.
The Lure of Big Profits.
Inasmuch as the company refer
red to in the following, is circulating
its enticing literature In North Da-
kota, we believe that the reproduction
of an article which recently appear
ed in a Michigan insurance Journal is
warranted. 1t follows:
We were recently shown the pros
pectus of the First National Fire In
surance Co., at Washington, d. c., a
handsome and extensively gotten up
affair. The proposed capital stock is
$1,000, 900, and this is to be distributed
among all the states OF the country,
limiting each one to a specific num-
Der Of shares OF stock. One Of the
inducements held out for the pur-
chase of stock is the enormous pro-
fits made by fire insurance companies.
The promoters have selected ON
twenty-eight OF the Oldest and larg-
est companies and state that their
average net prof1ts for the year 1911
averaged 40 per cent on the capital
stock. The figures were taken from
sworn statements and on their face
appeared correct, but the promoters
are careful not to state that most of
these profits were derived from in
terest on the companies Investments
1t has required years Of hard work to
collect these investments, and a new
company would, as a matter OF course,
have no such interest revenue to
draw upon for it's profits. 1t would
have to depend upon its underwriting.
In his report to the National Board of
showed that the net underwriting
profit OF $50 companies last yea was
| considerable less than l per cent,
| and that for the past ten years there
was an underwriting loss of one-half
OF / per cent. OF course a new COM
pany would come under this general
average and could not expect to break
into this select class quoted ii the
| prospectus. This and similar promo
ton schemes suggest the ~desirability
of a law in every state compelling
promoters to submit their prospectus
and plans to the insurance depart
ment and authorizing the department
to supervise all promotions. Stock
sold under Misrepresentation, express
ed or implied, not only separates the
innocent investor from his money, but
Is almost certain to lead to dissen-
| sions, or other trouble In the future.
In this connection 1T is gratifying to
note that h committee on laws and
legislation OF the national convention
of insurance commissioners has beer
directed to report to the convention a
Recommendation for uniform legisla-
ton to regulate the promotion Of in
surance companies.