any remedy to suggest for that, except that the companies should not agree to do any thing further than to give an equitable surrender value, according to the experience of the company.

Q. Do you mean to say this state of affairs must continue between the companies and the policyholders? A. If I were going to put a clause in that bill, I should put the same one in the gentleman talked of, that after the payment of two or three annual premiums the company will give a paid-up policy for a certain amount as the equitable value of the policy, determined from experience will purchase, and, as Mr. Facler says, the company, with a clause of that kind in its policy, could be forced in the court to give as much as it could equitably.

Q. I understood you to say one of the chief causes of failure was the competitive manner of doing business upon bases that were not safe? A. Paying such surrender values on their policies that it was unsafe for them to pay; I said that was one of the causes.

By the CHAIRMAN:

Q. Don't you think that taking careless risks is one of the causes? A. Certainly it is, and expensive management is a cause.

Q. If the death rate in one company is twenty-six in a thousand, is it not a sign that it is in a bad condition? A. Oh, yes.

Q. What is the average amount of death? A. It depends upon the length of time the company has been in existence and the age of its policies; a company may reach that time when its losses will reach fifty in a thousand.

Q. And still be in a good condition? A. Perfectly solvent; supposing it lives to a time, or lives to be sixty years old, for example, think at that age the mortality would be sixty or seventy.

Q. Would there be any objection to this form being introduced : If, after premiums on this policy for not less than three complete years shall have been duly received by them, said policies shall cease in consequence of non-payment of premium thereon they will, on the surrender of this policy duly receipted and the payment in cash of any loans, credits or indebtedness outstanding against this policy then outstanding against this policy at the end of thirty days the company will give a surrender value amounting to all the premium paid? A. Yes; it is unjust to all policyholders to put that clause in a policy, and I will explain the reason to you: a person insures at the mutual rate, the age of sixty under a policy of that kind, who had paid ten years premium upon his policy, if he should demand a surrender value of his policy, he would be entitled to receive from the company a paid-up policy, the reserve of which will be more than twice the reserve of his running policy, while at twentyfive he could get a paid-up policy for very much less than the company could afford to pay, and much less than the company have been in the habit of giving; I know a case where a man came to a company and his original policy was $1,000, and he demanded a paid-up policy of $1,200, and got it because his premium exceeded the face of his policy; it would perhaps be equitable and just to half a dozen

ages; those older would get more than they are entitled to, and those younger would get less as the age raised or went up.

Q. As a rule you succeed better and more equitably, you think, by leaving it to the company to determine? A. Yes, certainly; it is like a-half a dozen men going into partnership and saying we will determine our profits when we know what they are and not now; if you put a certain value on the policy, less than the company can afford to pay, it amounts to nothing; if you fix the rule higher than the company can afford to pay, you break the company and the policyholders lose.

Q. But the companies have been doing that? A. Yes; and I say one cause of the misfortunes of the life insurance companies has been the tendency to put that too high, which generally is the tendency of competition, that is to do as much as the companies possibly can.

Q. And you say there is no remedy? A. Yes; I say there should be put in a policy a surrender clause to the effect that after the payment of two or more premiums a policyholder should be entitled to a paid-up policy for such a sum as his portion of the reserve or excess that he has paid will equitably purchase in accordance with the experience of the company.

Q. Do you suppose any policyholder will understand any such provision? A. No, he cannot understand it, because no living man can tell what it will be ten years from now.

Q. Then you don't think it can be fixed? A. I don't think it can be equitably fixed, so as to reach every policy.

Q. You can determine it? A. Certainly you can equitably determine it.

By Mr. MOAK:

Q. What would you say to a law requiring insurance companies to deposit their reserve in security? A. It would be a very safe law for the policyholders, but I doubt if you can get a company to do business under that law; you must require all the policies to be registered.

Q. Require all companies doing business in this State to make a deposit? A. There may be many inconveniencies of great magnitude that would result from it; for instance, the company starting in life insurance would not be safe to start with less than $2,000,000, if it was going to do any thing.

Q. I understood you to say the other day, that where a policy contained a clause, that in case the assured omitted or ceased at any time to pay, after paying, for instance, three or five premiums, then that policy should operate as a paid-up policy for three-tenths of the amount insured; that you would call a liability would you not? A. The reserve on it would be a liability.

Q. And you would call the reserve on that policy a liability? A. Yes.

Q. Suppose a policy provided that the dividends as declared by the company might be applied by the company to increasing the

amount of his insurance, that you would call a liability? A. If it was so declared.

Q. If he applied it to that purpose, you would not regard the surplus on that as applicable to pay the loss on another policy, would you? A. Oh, no.

Q. Say a couple of years ago, let me see whether the same directors were directors in the Universal and Charter Oak; was Mr. Walkley a director in both? A. Yes.

Q. Mr. Andrew Alexander; was he a director in both? A. Yes. Q. Mr. William G. Lambert? A. Yes.

Q. Mr. Halstead? A. I think he was, yes.

Q. Mr. Henry Day? A. Yes.

Q. Mr. S. W. Torry? A. No; I don't know as to him.

Q. Mr. Marquand? A. Yes.

Q. Mr. H. H. Hill? A. Yes.

Q. Mr. Ashwell H. Green? A. Yes.

Q. Mr. Edward W. Lambert?

A. Yes.

Q. Was Mr. Lambert medical examiner in both companies? A. Yes, sir.

Q. In December last what salary were you receiving as president of the North America? A. Twelve thousand dollars.

Q. What salary as vice-president of the Universal? A. Twelve thousand dollars.

Q. How much as an officer of the Guardian? A. Nothing.

Q. How much as financial agent of the Charter Oak? A. I went into that thoroughly the other day; $8,000.

Q. You were receiving nothing from any source from the Guardian? A. No, sir.

Q. You never have been an actuary, I believe? A. I never have been a professional actuary.

Investigation closed.

DEAR SIR.I herewith furnish information requested by the committee on the occasion of my examination :

Total number foreclosure sales in 1876, 109; bought by company, 65; costs, disbursements and referees' fees paid by the company, $23,700.49.

Paid-up insurance, December 31, 1876: Policies, 16,549; amount, $36,200,774; reserve, $19,427,614; additions, $25,106,122; reserve, $13,807,080; reserve and loadings, $2,297,059; difference between reserve and surrender value paid in 1876, which is the money value of the vital deterioration by reason of withdrawal, $569,390.

The foregoing contains answers to all the questions which I was requested to make memorandum of. I must apologize for the delay which has occurred, but I have been under such constant pressure as to be able, with difficulty, to find time even to write this letter.

Yours respectfully.

RICHARD A. McCURDY,
Vice-President.

[Assembly, No. 103.]

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