all except four of the directors shall be members. The president stated that one of the five mentioned is temporarily without an automobile, but that it is his intention to purchase a car and insure it in the company in the near future. NATIONAL AUTOMOBILE MUTUAL CASUALTY COMPANY NEW YORK, N. Y. Examined to ascertain condition on June 30, 1919. Examiner: John E. Diefendorf. Financial Statement A statement of the income and disbursements from January 1, 1919, to June 30, 1919, inclusive, is as follows: Balance, ledger assets December 31, 1918.. $107,435 67 Organization This company was authorized December 10, 1917, to issue policies of insurance against loss or damage to automobiles (except loss or damage by fire or while being transported in any conveyance by land or water), including loss by legal liability for damage to property resulting from the maintenance and use of automobile; loss or damage resulting from accident to, or injury suffered by, any person, and for which the person insured is liable; loss against burglary or theft or both of such hazards. Since such authorization it has shown a slow but constant growth, and on the date of this examination it had approximately 1,850 policies in force, each covering at least one automobile or motor truck, with premiums in force of about $162,000. Cash Paid in by Directors The law under which this company was organized provided that companies of this kind should be required to maintain the same reserves as are required of old line stock companies with regard to similar lines of insurance. As a result, at the close of the year 1918, the officers of this company found the assets insufficient to cover the reserves computed on the basis of the requirements of an old line company to the extent of about $25,000. In order to eliminate this impairment the management paid in to the company the sum of $25,000, under an agreement with the company, a copy of which is attached hereto. The cash so paid in is deposited in the Metropolitan Trust Company of this city in a special account with an agreement that it will not be withdrawn except to pay claims of the company in the event the other assets of the company are insufficient to meet such claims. No interest is allowed by the trust company on this deposit. Attached hereto is a copy of a certificate issued by the said trust company concerning the status of this deposit. I find that the cash representing this deposit is not carried in the company's accounts as a ledger asset. However, it has been entered as such in the financial statement of this report. Since the payment in of the aforesaid deposit by the directors of this company the law regulating mutual automobile companies has been amended in a way which provides for a loan or advance of this kind, as follows: any director, officer or member of such corporation, or any other person, firm or corporation, may loan or advance to such corporation any such sum or sums of money, upon an agreement that the same with interest at a rate not to exceed six per centum per annum shall be repaid only out of surplus earnings or profits of such corporation with the approval of the superintendent of insurance whenever, in his judgment, the financial condition of the corporation warrants it, except that such approval shall not be withheld if after such repayment shall be made, such corporation shall have and be in possession of a surplus equal to ten per centum or more of its gross annual premium income. Such surplus, however, shall be ascertained for the purposes of such repayment, upon the basis of the unearned premium reserve being charged at a sum equal to one hundred per centum of the unearned portion of the gross premiums charged to policyholders for the policies in force from their dates of issue. Any such sum or sums shall not form a part of the legal liabilities of the corporation, but until repaid all statements filed with the superintendent of insurance shall show the amount thereof (Sec. 341.) * The law has also been amended with regard to reserve requirements of mutual automobile insurance companies, requiring thereafter that companies of this kind must maintain 80 per cent of the unearned portion of the gross premiums charged to its policyholders for the policies in force from their dates of issue, for a period of five years after such company has commenced the business of writing insurance, in lieu of 100 per cent, and that they shall be required to maintain for outstanding liability losses a reserve equal to 50 per cent of the earned premium on liability policies written during the three years immediately preceding the date as of which the statement is made, less all losses and loss expense payments made under such kind of policies written in the corresponding years, in lieu of the former requirement of 60 per cent. However, the provision is made that in any event such reserve shall for each of such three years be not less than the estimated amount of all outstanding liability claims. In my opinion, the liability loss reserve computed on the 50 per cent basis above described is insufficient to meet the estimated liability losses of this company at this time, and I have, therefore, entered such liability on an estimated basis in lieu of the per cent basis. 50 As the result of the new method of computing reserves and the payment in of the said $25,000, by the directors of this company, as referred to, the company shows a surplus, as of June 30, 1919, of $12,782.92. Expense and Management I find that the ratio of expense of management to net premium income for the six months covered by this examination amounts to 23.7 per cent. Contract With Secretary as Official Underwriter Filed with this report is a copy of a contract made by the company with its secretary, Jean V. Lutz, Esq., for his services as official underwriter. Records and Adjustment of Claims The records of this company are in good condition. The claim adjustments are being made as promptly as business of this kind warrants, and settlements seem to be made on a fair and equitable basis. NATIONAL SURETY CO. Examined on increase in capital from $4,000,000 to $5,000,000. NEW AMSTERDAM CASUALTY COMPANY NEW YORK, N. Y. Examined on increase in capital from $1,000,000 to $1,250,000. Report dated December 27, 1919. Examiner: John E. Watson. |