The Washington herald., 1914-05-21

Expect Few Losses.
THE result of such action will be that
the company will have q paid-up capital
in the neighborhood of $250.ooo and q net
surplus in the neighborhood of $z70.o0o.
and a reserve Of something over $l0o0oo.
This will make Of the Commercial . we'll
balanced company from the point Of cap
ital and surplus. A careful re-examina-
ton of the Commercials business In
force leads us to firmly believe that the
losses will be very much lighter In the
future than they have been in the past.
We have gotten rid Of much business In
fning our operations to States in which
the average loss ratio of all companies
is low"
Out Of town stockholders were mailed
a circular with proxy enclosed. This
bears appeal. on behalf Of the reduction
plan, bears the printed signature of
Robert N Harper, president Of the Dis
trict National Bank; Bates Warren. vice
president Of the Continental Trust Com
psny: Justice George W. Atkipson. Of
the United States Court Of Claims:
Bestor r. Walters. vice president Of the
District National Bank Robert R. Tuttie,
president Of the Commercial Fire Instr-
ance Company. and F. 8. Dudley. vice
president Of the same. All are stock
holders and directors Of the Commercial.
and their signatures are In the order
mentioned.
This circular ID dated May T. D1L
Under date of May Is. 1914, another form
was mailed to District Of Columbia stock
holders. bearing the signature Of Presi-
sient Tuttle only.
Had . Had Eject.
The out OF town circular reads. In
part, as follows: THE Congressional In
vestigatjon OF this company . little over
year ago had q very bad effect upon
U.S. The Investigation itself. in our
opinion, waS wholly unnecessary and
should never have been made. The fact
that 1t did occur and was heralded
through the land by newspapers caused
our agents and policy holders to become
disturbed, and Thousands of policies were
cancelled, upon which the company had
to pay premiums. Directly snd indirect
ly the investigation caused serious loss
to the company, but by untiring efforts
the officers have regained the confidence
of the agents and OF the insuring public
with the result that the business now on
the books Is believed to be Of an excel
lent class and the losses are running very
low. The company Is in a thoroughly
solvent condition. but We believe 1t would
be better IL a part OF the capital was
put into the net surplus.
The enclosed letter from Actuary s.
H. Wolfe, who was called in by your
board to look into the affairs of the COM
pany, indicatesJ th&f the Commercial can
60 ahead and become q successful COM
pany under the lines he lays down."
Here the president announces that he
has voluntarily cut his own salary from
S, 900 to 2,5o0 q year.
Our surplus Of 10000 as Of Decem-
Der g." continues the circular, 'is too
small to enable US to do large amount
of business. In the first place agents
demand a company with a large surplus,
so do policyholders. In the second
place, the unearned premium require
ment of the various insurance depart
ments Of the States where We are do
ing business is SO high that q company
necessarily has to take from its sur
plus in order to maintain the reserve
required. For example: II We write a
three-year policy on a dwelling and get
a premium of so. the law require that
we should put $50 Of that premium in
the reserve.
Expense of Business.
The average expense Of doing busi-
ness for all companies Is q per cent.
That includes agents commissions" &c.
Therefore, the expense of SO premium
is on the average $40. q total Cinclud-
ing reserve) Of S11.70. for which we are
getting but so. OF course. when the
policy has expired that $50. less the
losses, goes back into the surplus. Now
the surplus of a company belongs Just
as much to the stockholders as does the
capital; in fact, the surplus works hard
er for the company than does the
capital"
The local circular says: "The vote of
Commercial stockholders received
is SO overwhelmingly in favor Of the
increase in the surplus by the reduc-
ton Of the capital-S6 per cent having
directors have decided to call a special
meeting Of the stockholders. to be held
in the company's principal oflces on
the morning Of June 10 to consider and
act upon this proposal.
"The advantages to be gained from
the adoption of this plan are twofold:
First, II viii put the company in q
strong position with ample surplus to
write the preferred class of business.
which is considered the most profitable;
secondly, in the opinion of s. H. Wolfe.
the Insurance actuary. and Of our d.
rectors, II will enable the company to
go on. regular annual dividend-paying
basis.
This reduction in the capital. with .
increase In the surplus.
does not affect the book value of your
stock. except In the amount OF the cash
dividend OF approximately $4,000 which
will promptly be distributed to stock
holders in proportion to the amount Of
stock held by each Of them. II It ID not
convenient for you to attend this meet
ing In person. kindly sign and return
the inciosed proxy BY mail"
To Rearrange Finances.
The way the company proposes-to re-
arrange the finances 10 indicated by the
following extract from its out-of-town
circular: m the plan of the reduction
Of the capital and the increase Of the
surplus should be favored by the stock
holders II would result about like this:
We could pay the stockholders . - nar