decrease instead of an increase of $481,876.50, and 1872 a still further decrease of $1,164,982.12. The constant tendency of these figures, although varied by exceptional causes, some of which are readily ascertainable, is steadily upwards until 1868. For a year or two there is a wavering among the columns, and thereafter the tendency is almost uniformly downwards. The same thing is apparent in that part of the table confined to companies of other states doing business in this State. It is no less marked, although, perhaps, a little more irregular, in that portion devoted to the history of the growth of our own State companies." The Massachusetts commissioner does not use many figures, but he substantially corroborates the statement of his New York confrère: "The statement made in our last report in regard to the progress of life insurance in the United States, then predicated upon the exhibit of 1870 and some previous years—namely, that although the business had gone on increasing, its volume in that direction was making slower advance-cannot now be safely reaffirmed. While the ratio of growth was reasonably fair in 1869-70, the constantly ebbing tide of expansion denoted a speedy approach to another turning point which has now been reached, as shown by the statistical results just presented. But when the causes which produced the sudden and extraordinary growth at one time reached by the business in this country are properly understood, the more moderate pace at which it now proceeds will seem but the very natural and necessary sequence. There is in this, however, no ground for discouragement in regard to the prospective interests of the business. "As already indicated, the remarkable and unprecedented advance of life insurance accomplished its longest stride in 1866. Its most rapid expansion, extending from 1864 to 1868, inclusive, rising from $382,569,890 to $1,981,915,920, may be fairly presumed to have resulted from the combined operation of several causes. Being an institution of real and intrinsic value, it was inevitable that, as soon as companies were established in this country, and in readiness to issue policies on lives, people should hasten to avail themselves of the opportunity so auspiciously presented. The institution possessed something of the charm of novelty, and was eagerly sought for. The want was wholly unsupplied; but as soon as the means for its satisfaction were known and understood, the supply rushed in to meet the demand as suddenly as air rushes into a vacuum. The marvellous alacrity with which life insurance was taken up cannot, however, be wholly explained in this way. Savings banks meet a real want, as well as life insurance companies; and yet their introduction and multiplication have been steady and gradual, not quick and sudden. Life insurance has been successfully introduced into other countries besides America, without at once attaining the gigantic proportions already reached in our own-a fact from which many suggestive lessons may be drawn." Mr. Chapman's remarks on contraction are worthy of perusal. We subjoin a paragraph or two : "Three methods present themselves: First. By voluntary retirement from active business, and a gradual and honorable winding up of affairs; Second. By the forced withdrawal of a company, under the action of the superintendent and attorney-general, which dissolves the corporation; Third. By a system of reinsurance known as amalgamation. Since the organization of the department, no company, with the exception, perhaps, of the New York Life and Trust, has adopted and steadily followed the first course, and hence little consideration need be given it. A word or two may not be inadmissible as to the second method of reduction. It seems to the superintendent, as a general proposition, that, while the business of life insurance is languishing, a little more elasticity may be safely allowed to the asset side of a company's statement than at a time when it is brisk and constantly increasing. Items absolutely valueless should, of course, always be rejected; but an item possessed of some value, although known as "questionable" in general, may be judiciously admitted as worth something, if, by so doing, a company can be tided over the shoals of one year into the smooth waters of another, thus saving the shock to the system of insurance caused by every wreck, But such an asset admitted in one company should be admitted in all, or relative injustice would be done. In other words, the same asset should be allowed to all companies presenting it. In drawing a line, however, between admissible and inadmissible assets, which shall do injustice to none, it can be given a different place in different years It is submitted, that each year this line ought to be moved higher so as to leave below it some questionable asset that had been previously allowed, till all such should be eliminated. The stringency should maintain a constant tendency toward greater security, and the line should be kept close up to that point which will leave a bare surplus to some company. Of course, it should never be placed so high as to cut off any sound item of assets, nor should it ever be placed so low as to save any company which is insolvent or unsound. When, after making all reasonable and safe allowances, a company is found to be irretrievably unsafe, it must be dissolved." That a goodly number are "irretrievably unsafe" is but too true. Mr. Clark's outline of "companies admitted and withdrawn" will serve as an appropriate pendant to Mr. Chapman's remarks: "While only fifty-six Life and Accident Companies are now authorized in Massachusetts, the detailed statements of the present report include three or four whose retirement has taken place since their publication was commenced. The tabulated results appearing in the text of the report, however, represent only those authorized in the State. "One new company, the Republic Life, of Chicago, whose financial and business statements will be found in their proper connection in these pages, has been admitted since the last report, and nine others have retired. "The Commonwealth Life, of New York, voluntarily withdrew early in the year; not from any lack of confidence on the part of the Commissioner, but simply for the purpose of curtailing its business to smaller, and consequently less expensive and more easily managed, territory. The Delaware Mutual, admitted in 1870, has also withdrawn, for similar reasons. The International Life and Trust Company, also admitted in 1870, has ceased doing business in the State. "The Craftsmen's has consolidated its business and reinsured its risks with the Hope Mutual; the Empire Mutual, which last year reinsured the out-standing risks of the American Tontine and the Farmers and Mechanics', and also assumed the American liabilities of the International Life Assurance Society of London, England, has now perfected a similar negotiation for itself with the Continental; the Amicable Mutual has reinsured with the Guardian Mutual; and the Mutual Protection, after having absorbed the Widows and Orphans' Benefit, and changed its own name, under legislative sanction, to the Reserve Mutual, has finally merged itself, with its outstanding risks, in the Guardian Mutual; the Hercules Mutual, by dint of mismanagement and inexperience, has fallen into the hands of a receiver; but arrangements are reported in progress for the reinsurance of its limited amount of risks. Thus ends the mortuary record of companies for the present report." Now we come to Amalgamations, another interesting subject. The fact that one company amalgamates with another is not by itself a reflection on either. Policy-holders must judge by the circumstances of the case. There are a large number of companies whose prestige would be vastly improved by amalgamation. Thus, for example, it is no exaggeration to say that there is not one of the Massachusetts companies whose prestige would not be improved by amalgamation with the New England Mutual; but we are by no means sure that sterling institution would accept the amalgamation of the best of them. At least two-thirds of the Hartford companies would improve their reputation by amalgamating with the Phoenix Life-that is, provided that sturdy company would accept the conditions. We may seem unkind, if not actuated by diabolical motives, if we say this is true both of the Etna Life and the Connecticut Mutual. Yet such is our sincere opinion. But, of the two, we would certainly admit the Ætna Life into combination with the Phoenix Life in preference to the Connecticut Mutual. Perhaps we are wrong in this, but we have never known the Ætna to refuse the payment of its little bills, which is more than we could say of the Connecticut Mutual. The Etna, it seems, pays its little bills, but has become rather tedious of late in paying its big bills, especially its endowment policies and its annuities. It is said that there is a certain firm in Maiden Lane and John street, in this city, who can give a rather striking illustration of the Etna's new plan. It is true that we are grossly misinformed if the Connecticut Mutual is not as much averse to paying its large bills as its small bills. As for the Travellers' and Hartford Life and Annuity, we think the sooner they amalgamate with some respectable company the better. But let us hear what Superintendent Chapman has to say on the subject: "By the laws of 1853, chapter 463, section 1, as amended by the laws of 1865, chapter 328, section 1, it is provided that: 'Every company organized under this act shall have authority to reinsure any risk, herein authorized to be taken.' Power to insure 'any' risk, would seem to include power to insure all. The question whether the reinsured policy-holder has any adequate remedy against his company or its officers for a wrong done him, and the no less important one, whether the policy-holder in the company reinsuring has any adequate remedy against his company or its officers, for injury done him, is left as a purely legal question, to be finally settled by the courts. The law seems to give absolute authority to any company organized under the act of 1853, to make a contract of reinsurance, partial or total, with any other company. But while to reinsure may be legal, the manner of doing it may be illegal. Here would seem to be the vulnerable point of attack. A judicious assault here might disclose fraud and corruption in some instances, on the part of officers, that would well repay the trouble and expense of a trial. But, however, this may be, and however reprehensible the practice, of wholesale insurance,' the superintendent has been unable to find, in existing law, any provision which gives him the slightest practical control over it. The contract can be made without his knowledge or consent, and until some law is passed, prohibiting, or giving him authority to regulate or prohibit the making of such contracts, he is absolutely powerless to interfere in the premises. Examinations, no matter how frequent, will not touch the evil. He might enter the office of a company, and examine and re-examine perpetually, and yet, so long as the company complies with the law, and has one dollar of surplus, he can do nothing to prevent the making of such a contract. Whether he should have the power given him to prevent it, is a very grave question, and will be referred to in another connection." Mr. Clark discusses the objections which some of the policy-holders have to amalgamations in which they have had no voice : "A course, however, which is frequently adopted by companies that have failed to meet with all the success which they anticipated, is to transfer their business to some other company. This is done by way of reinsurance, the policies of the unsuccessful or retiring company being reinsured in a mass in the other company. Such a transfer is properly termed an amalgamation, and is different from a consolidation of the two companies by an act of the legislature. But reinsurance does not put an end to the legal existence of a company. The Massachusetts statute (Chapter 349 of the Acts of 1870,) relating to this matter only forbids reinsurance of fire and marine risks in companies not represented in the State. If the company in which the reinsurance is obtained is so represented, the statute does not prohibit a reinsurance of all the policies of a company. But this does not affect life insurance, and there would seem to be no statute in force in this State against amalgamations. It is for the Legislature to say whether they ought to be regulated by law, and a statute passed for the purpose. "Since the valuations for 1871 were commenced by this Department, several of the companies doing business in the State have been amalgamated, and large numbers of the policy-holders in those companies have made complaint that their rights and interests have been sacrificed by the process. Their feeling is very strong that they have some rights which should entitle them to a voice in such disposition of their interests. As there is no right of action on a policy of insurance until after the death of the party insured, and as a right of action, if any existed, against a company, which had transferred its whole business, would be of no practical value, no opportunity is given to the policy-holder of making any election. He is practically compelled, whether he wishes to do so or not, to look to a different company for the performance of a contract entered into with another. If he accept a dividend or any advantage from the new company, or even if in order to prevent a forfeiture of his policy he make a payment of a premium to it, he may find that these acts are construed as an election binding him to that company exclusively; and he may also find himself, without his knowledge or intention, deprived of his technical right of recourse to the original company." But we will make room for Mr. Chapman's table showing the number of amalgamations made by New York companies from 1859 to April, 1873. In this table will be found every one of the companies whose untimely end we had predicted : |
