Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-01-17
WOLFEE|GURES.LOSS|
fContinued From First Page.)

30 .; o am2 me result was surplus 81
( ,SGist of His Testimony.
The sist Of the accountants testimony
was that the company lost $4,000 on its
operations for. the year 1912. but still
had $4,000 surplus, If the affairs were to
be wound up at the end of 1872.
From a policyholder's standpoint"
said Judge Prouty. you were $16''ooo
short"
This figure includes the insurance re-
serve.
Yes said the witness.
That's IL cents dozen for eggs" re-
marked Judge Prouty.
The committee then adjourned.
Tells of Bad Years.
Lee ]. Wolfe. insurance expert. testify
ing in favor of the Commercial Fire In
surance Company. continued on the stand
late yesterday afternoon. He began by
speaking of bad years. and fire losses
Mr.. Carusi asked him if it is not usual
for company to show an underwriting
loss year after year while it is building
up business.
Yes. SIR said Mr. Wolfe.
Mr.. Carusi said: I'm the case of the
Commercial. it is quite evident, from the
figures you have furnished, that there has
according to departmental standards and
leaving out profit on the building which
is not due entirely to the fact that it
was growing company
Another element entering was that it
had a considerable loss ratio in 1912.
Fire Loss Peculiar.
Mr.. Wolfe explained further on in the
testimony:
The Commercials fire loss during the
year 1912 was a peculiar one, in that it
did not have any large amount. 1t was
made up of a numerous lot of small
losses. 1 have those figures here, If you
would like to. have me read them.
looked into that matter as part of my ex-
animation to try to see just what the
trouble was with the losses. For instance,
l would say that where a small COM
pany took a large amount of risk on any
one risk, the easiest way to find that out
was to compare the losses.
Il found. for inStance-juSt on rough
figures, of course they do not exactly
balance up-that of the losses paid during
ones that I picked out and which really
very nearly balance with the other fig
ures. when you consider the unpaid losses,
were as follows:
From one dollar to one hundred dol
lars there were 165 losses; from 800 to
$3.50 there were thirty-six losses; from
$251 to $500, fOrty-one losses; from 1901 to
$3.50 there were thirty-nine losses; from
T51 to 81 900 there were forty-two losses;
from $1,O01 to 81, 500 there were eighteen
losses; from 81 sol to $1,000 there was one
loss. and $4,000 and over, one loss of
$2,O67.1S, and Of that one part of that
was reinsured, so that it shows that it is
the result of q general loss all over the
country. 1t is not the result of under
writing in one particular place or one par
ticular risk. or anything like that. 1t is
simply a condition which existed in 1904.
and which was participated in by all of
the companies, that the fire record was.
very bad during 1912"
Questioned by Carusi.
LET me ask you this question" Mr..
Carusi said, because 1 think it goes
right to the vitals Of this whole question
as to what the future Of a company may
be expected to be, although 1t may have
somewhat more than anticipated fire
losseS during the particular year or par
ticular ten months, and that Is this: You
stated this morning that it was matter
of averages with fire insurance COM.
panies, a value Of averages every year;
there were good years and bad years."
Yes, sir"
"Well. now, this company that is being
investigated now, the Commercial, be-
cause there Is no question about the I'M
derwriting of the First National at the
present time. its underwriting Is being
done by Tuttle. Wightman & Dudley,
Inc.?" ~
Yes. sir replied Mr., Wolfe. they are
/. Suggests Fair Action. -
'"rhey are the general agents of the
COMPANY said Mr.. Carusi. Now. is
not the fair thing to do in deciding what
IT, x1yi1l inc
with the Commercial. to figure up. the
year with futile, Wightman.;& Dudley,
Inc, with respect to the Commercial be-
cause they are the underwriters whose
skill and conservatism, if you please, we
want to learn how to arrive at. Is that
not so?''
THE proposition is just this replied
Mr.. Wolfe. You cannot judge of the
underwriting ability of anybody by TAX
ing one year. and especially a bad year,
which has been bad for all underwrit-
ers."
"Just excuse me, Mr. Wolfe That
answer Of yours is helpful, but 1 want
to go further than that said Mr.. Ca
rusi. II am willing to take this bad
year with futile. Wightman & Dudley.
was, SO far as their underwriting is con-
cerned. Have you not already testified
that on the business that they put on
the books in 1912 there was a loss ratio
of IS per cent?
Yes, sir, on the gross premiums
You said you did not think. consider.
ing the company was young company
and had to take the best class of risks
it could get in new territory. the average
was particularly high, did you not ?"
questioned Mr.. Carus.
Il made another qualification" replied
Mr.. Wolfe. that considering the very
bad year that we have had in the last
year, 1 would not consider it was so bad"
Question of Judging.
Mr.. Wolfe, continuing, said:
You would not judge the manager of
a railroad company for his one years
record. especially If during that year
there had been a very bad flood and most
of his bridges had been washed away
and several hundred miles Of track had
been destroyed, and the operating ex-
penSes of that year were unusually high;
you would not turn around and say, That
man does not know what he is doing, or
anything like that. You have to take
into consideration what experience the
man has had, and whether he IL likely
in the future to substantiate his position
and make. good.
Il have looked over this thing, and
that has been bad year for all COM
panies, especially for this one and it just
caught 1t in condition where it was less
able to stand it, and 1 have looked up
Mr.. Tuttle's record, for instance, as an
underwater, and know he has had a
lot Of experience, and I have heard Mr..
Best testify here that his record was al