New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-08-24
HROM the hazardous nature OF
stock fire underwriting at all

times, and with possibilities of
great conhagration losses ever be-
fore us, no one will gainsay that
those who have their money at stake
are entitled to good returns on their
business operations outside the
earnings that may be made from in
terest on invested assets.
1t so happens, however, that for
long period of years the total bus
mess Of all companies in the aggre-
gate shows an operating loss. The
narrow margin of profit, in years
when there is profit, and the general
average of loss on the total opera
tons over long periods, has had a
lettering effect upon the organiza-
ton of new companies and has
caused many old and respected in
stitutions to retire from business.
Only a few years ago there were
more than four hundred stock COM
panies competing for business in
the United States. Today there are
few over three hundred. During
the past ten years the dividends paid
to stockholders on the capital and
surplus they originally invested in
one hundred and thirty-fve So
called "millionaire" companies,
Companies having a million or more
in assets), amounted to trihe less
than per cent.
What is Of immediate Importance
in this connection is that interest on
investments not only furnished all
the dividends to stockholders, but
also furnished something over for
accretions to the surplus which is
held for the greater security Of
policyholders and to establish conf
dence.
1t was for these reasons that the
National Convention Of Insurance
Commissioners, in reaching the
agreement with stock fire insurance
companies as to what constituted a
reasonable underwriting profit,
Outlined in the previous sketch) !,
agreed also that interest on assets,
including the reserves known as
"unearned premium liability" which
previously have been explained,
should be credited to their invest
ment account and not to their I'M
derwriting.
Were interest earnings on the in
vestments of stock fire insurance
companies to be diverted, it would
either cause an immediate increase
in rates to make up for the loss Of
income, or the withdrawal from
business of many companies be-
cause, to repeat previous state
ments, and with emphasis. the re-
turns from both sources today Gun
derwriting and investment) are
barely sufficient for reasonable
profit to those in the business and
are not sufficient to attract new
capital.
Insurance is not commerce, &C
cording to a celebrated and long
standing decision of the Supreme
Court Of the United States, and so
each state prescribcs the conditions
under which the companies Of other
states may be licensed to transact
business within its borders. The re-
snlt is medley of insurance laws
governing our operations and defin-
III S.t 49, $780, xa'.o~,4 ~
an ~: ni.lI So. ple1:lI s's,0'o'
pios ioi'is ai'o Aoi e'''''s ''o"
Inc eHect OF retahatory laws IS I'M.
mediate ana severe. tor instance, II
New York requires Of the companies Of
otner STATES compulsory 'nVesement IN
New York mortgages or any other
slass of securities, under retaliatory
statutes ehoSe a,a'es az once REQUIRE
ahveoe'ne"r ~ Ne" .ol" ''ease VIII
Pa..,eS III 'neIi i''oi 'e go % o-neI w.
scr'Deo securities 'uch investments
'naoe coinpu .So'y on s'ocN nre i'sul-
H'oe eonipa"lcs ~ az? go vti:1ne-
age, must nave 'ne eneSV " cu''ai'ils
.neir operations 50 'oouei"s c9inpe' +
.Io' anu "a ,. ny s"pae'ss, ~ 80. 80
~. " co. ~ 49, VII. I'm paws ..o."
','e I""o''on9 1o' "n'On '"ey "crc
Ats'y sVoch '''e i"'u'e'"c .o''' pHny
"oiehy inc name wants 20 o'VerSi'y
l's ahFes1men's 80 as 20 - es'aDiisn n
oon"oe"ce IN us S'@p''''S anu ~
make mem narHctaolc' IN case or con
nag'a'ioh iosses' most quickly ara with
nc 'eas- 9ac'"'Fe.
IN our business, the contact with the