COMPARATIVE SUMMARY OF BALTIMORE JOINT STOCK FIRE INSURANCE COMPANIES.

From the above figures it is apparent that the past year has been an unprosperous one for the Maryland companies, the premium receipts showing a decrease of one hundred and forty-two thousand dollars less than those of the preceding year, the losses seventy thousand dollars more. Capital, Assets, Liabilities, etc., all show a very material decrease. The companies of other States and foreign countries have met with a corresponding unprofitable year.

Three local companies have retired since January 1st, viz; Associated Firemens, which was absorbed by the organiza. tion of the Fidelity Fire Insurance Company of Baltimore, also the Howard and National, which were absorbed by the organization of the United Fire Insurance Company of Baltimore.

COMPARATIVE SUMMARY OF FIRE INSURANCE COMPANIES OF OTHER STATES IN MARYLAND.

COMPARATIVE SUMMARY OF FOREIGN FIRE INSURANCE COMPANIES IN MARYLAND.

In the report made a year ago, comment was made upon the increased volume of life insurance effected in this State during the year 1897 as compared with 1896. It is gratifying to note that with continued confidence in the stability of financial conditions and a consequent general increase of prosperity among the people, there has been a considerable gain in the amount of insurance effected during the past year as compared with 1897.

The following figures for new business written in the State of Maryland during the two years are as follows:

The average amount of policy of ordinary insurance decreased from $2,340 to $2,061, so that while the number of policies issued increased more than thirty per cent. as compared with the previous year, the amount of insurance effected increased less than fifteen per cent.

The large increase in industrial insurance, as compared with the previous year, is chiefly due to the inclusion in this

statement for the first time of the business of the Baltimore Mutual Aid Society of Baltimore City, which formerly conducted upon the assessment plan, was during the past year reorganized upon the stock plan under authority given to it by Act of Assembly. The amount of insurance effected in Maryland reported by this company, $1,735.849.75, very closely corresponds with the increase in the amount of industrial insurance, while the number of policies issued exclusive of those reported by this company (33,320) shows an increase of about nine per cent. The average amount of policy issued by the Mutual Aid Society appears to be but $52 and, with its business included, the average amount of insurance under industrial policies issued in this State during 1898 was but $100 as compared with $128 during the previous year.

The decline in the rates of interest obtainable upon investments of the class to which life insurance companies are restricted, is a subject that has during the past year received the most serious consideration from those charged with the responsibility of the management of those companies. It is generally conceded by those most familiar with the financial situation that low rates of interest may be expected to prevail in this country for many years to come, probably permanently. With the increase of wealth and accumulation of capital seeking investment, the same conditions have arisen here that have long existed in older countries of Europe, and corresponding results in decline of rates of interest follow.

Fifty years ago the business of life insurance first began to be developed in this country. The few companies then existing, with remarkable prudence and farsightedness, adopted four per cent. interest as the rate to be assumed for the future increments of their sinking funds. During the greater part of the half century that has since elapsed, very much higher rates of interest were easily obtainable, so that a large margin for surplus earnings was derived from interest receipts; but, under the changed conditions, numbers of companies have been adjusting their premium rates for new business upon the

basis of three and one-half per cent. or even three per cent. as the rate to be assumed for future interest earnings. This has naturally involved an advance in rates of premiums, for a decrease in receipts from interest necessitates an increase in premium revenue, if the total receipts from interest and premiums together are to be kept up to the amount requisite for meeting current and maturing claims under insurance contracts.

With the advance in premium rates there has developed a disposition greatly to broaden the scope of the insurance contract, in the removal of restrictions upon travel, residence and occupation, reducing to a minimum the conditions under which policies may become forfeited, and especially in the introduction into policies of guarantees as to the amount of cash obtainable for them in the event of surrender. One company has since the first of the year announced a policy absolutely incontestable, for any cause, from the date of its issue. When surrounded with proper safeguards for the company, this liberalizing of the form of the insurance contract. is no doubt a great improvement, especially in eliminating the harsh features by which not many years ago policies of life insurance, upon which premiums had been paid for many years, used sometimes to be forfeited through accidental neglect or oversight on the part of the policyholders, and the benefits of careful savings lost to those for whose protection they had been made. The business of insuring lives is, however, likes all forms of insurance, a business of assuming risks, the risk of death; and prudence would suggest that it may be unwise to complicate with this risk obligations that involve other risks, such as agreements for the purchase of policies upon demand, as such demands may be most frequent in times of financial stringency, when, if the sale of securities were made to meet such demands, they would have to be sold upon a depressed market, and consequently at a loss. But with proper reservation, such as savings banks ordinarily adopt for their protection, the terms upon which surrendered

policies will be purchased by the company can no doubt be safely embodied in the contract. The guaranteed cash values are now much larger than those formerly given by companies generally for similar policies, thus considerably reducing the amount of compensation to the company for the withdrawal of a risk below the figure which was formerly considered no more than adequate.

When the Insurance Department was first established in this State, and laws enacted prescribing the method for ascertaining the liabilities of life insurance companies on acconnt of outstanding policies, it was provided that policies should be valued according to the American Experience Table of Mortality with interest at four and one-half per cent. This was in accordance with the existing laws in a number of States. Since then, however, the standard of valuation has in most States been changed to the Actuaries' Table of Mortality with four per cent. interest; and a number of companies doing business in this State have asked to have valuations upon this higher standard accepted by this Department, so as to avoid the cost of a double valuation. These requests I have felt justified in acceding to, as the authority under the law seemed plain for the Insurance Commissioner to accept valuations upon any sound basis not less than the one prescribed in this State (Code, Art. 23, Sec. 122, Par. 3).

Legal valuations, imposed as a measure of solvency should, in my judgment, be somewhat lower than that adopted in the usage of the most prudently managed companies; but with the tendency on the part of the companies now to adopt the assumption of lower rates of interest, three and one-half or three per cent., it seems as though the time has come to change the legal standard of valuation in this State to the four per cent. basis, as has been done in the States in which most of the life insurance companies in the country are situated.

Two or three companies, organized in this State, grant insurance against sickness, guaranteeing a certain weekly