A statement of the income and disbursements of the company from the date of its organization, March 5, 1918, to September 30, 1918, is as follows: Agency Contract At the time of the organization of this company an agency contract was entered into between the company and J. R. Young. The latter subsequently assigned his interest in the contract to the Merchants Agency Company, Inc., which company assumed all the obligations thereunder. The said contract provides substantially that in consideration of the payment by the insurance company to the agency company of 30% of the annual premium income, the latter company will perform the duties of general manager of the insurance company, as provided in the by-laws, and will also pay all expenses of the insurance company accruing during the term of the contract, except expenses incurred in the investigation, adjustment and settlement of claims, premiums for reinsurance, directors' fees and their travelling expenses. By a subsequent agreement it was mutually understood that the commission running to the agency company would be paid only as the premiums were earned by the insurance company. The officers of the insurance company, who are also connected with the agency company, have assured me that the full intention of this agreement is that there shall be no liability in any event upon the part of the insurance company to pay any commission upon premiums, except as earned by the insurance company, and that the contract will be amended satisfactory to the Insurance Department. I have therefore entered in this report, as the amount due the agency company since the organization of the insurance company, 30% of the earned premiums only. Taxes, Directors' Fees, Etc. The contract above referred to provides that the payment of taxes, directors' fees and directors' travelling expenses shall not be assumed by the agency company. However, as the law limits the management expenses of a company of this kind to 30% of its total premium income, and as this company has obligated itself to pay 30% of such income to the agency company, it is obvious that, since the State Insurance Department has ruled that the items above mentioned are chargeable to management expenses, the insurance company in paying the same is exceeding the legal limitation referred to. I am informed, however, that, as the result of the Department's ruling above mentioned, the agency contract will be amended immediately, to the end that all taxes, directors' fees and their travelling expenses will be assumed by the agency company. have therefore eliminated such items as a liability of the insurance company in the financial statement of this report. Contract in Relation to Assessment Feature I The policies and bylaws of this company, in accordance with law, provide for an assessment upon members, in the event of insolvency or impairment of reserves, not exceeding twice the amount of the regular premium set forth in the policy. In order to relieve the policyholders of the company from this contingency the company has entered into an agreement with the American Reinsurance Company of Huntington, Pa., whereby the said company, in consideration of the payment to it of an annual premium of 5% of the gross earned premiums of the insurance company which, in any event, shall not be less than $5,000 agrees as follows: To indemnify the policyholders of the insurance company against loss by reason of the liability incurred by them in accepting the policies of the insurance company as and only as to that liability of the policyholder which is a contingent liability to an assessment or assessment in an amount equal to two additional premiums in addition to the cash premiums provided in the policies. As to such additional premiums the guarantors are to be liable to the policyholders only for such assessment or assessments after the policyholders have been called upon for the payment of such assessment or assessments; it being expressly agreed that the guarantors shall incur no liability to the policyholders, until said policyholders shall have paid such assessments in money, pursuant to the conditions of the contingent liability above referred to. The contract further provides that upon the failure of the insurance company to pay any claim or claims under its policies on account of insolvency, the American Reinsurance Company will pay to such policyholders the amount of such loss within a reasonable time after the final determination that such loss is due and payable, and written notice of the failure of the insurance company to make such payment is received by the American Reinsurance Company. It appears that subsequent to the execution of this contract the liability for the payment of the premiums thereon was transferred from the Merchants Mutual Automobile Liability Insurance Company to the Merchants Agency Company, Inc., by mutual consent, the intention being that the latter company will relieve the insurance company of all liability to pay the stipulated premium. Filed herewith are copies of the contract with the American Reinsurance Company, the subsequent agreement shifting the liability for the premium thereon from the insurance company to the agency company and a letter written by the president of the latter company to the insurance company in explanation of the said agreement. Business in Force The total premiums in force on September 30, 1918, amounted to $103,514.56, out of which there has been paid the sum of $250 to another company for special reinsurance. The number of policies outstanding numbered 1,408, covering 1,511 automobiles. Officers The officers of the company are as follows: Urban F. Jehle, President J. R. Young, Vice-President and General Manager Underwriting Experience From the number and character of the losses incurred there is every indication that the underwriting experience of the company for the first year will be entirely satisfactory. It is evident that the risks assumed have been carefully and well selected. Records and Accounts The records and accounts were found in good order and well and accurately kept. Interest I am informed by the vice-president and general manager of the company that the bank deposits of the company earn interest at the rate of 4 per cent. However, no interest had been credited by the banks prior to the date of this examination, hence no credit has been given for same in this report. Cancellations Policies written and cancelled the same month have been eliminated both from the written and cancelled business as shown in this report, the same being considered as policies written but not accepted. MOTOR CAR MUTUAL CASUALTY COMPANY NEW YORK CITY Examined on organization. Report dated March 4, 1919. Supplemental report dated April 15, 1919. Examiner: George II. Jamison. NATIONAL AUTOMOBILE MUTUAL CASUALTY COMPANY NEW YORK Examined to ascertain comlition June 30, 1918. Report dated July 30, 1918. Supplemental report dated November 15, 1918, showing con dition on October 31, 1918. Examiner: John E. Diefendorf. Financial Statement Ledger Assets Cash in banks, on interest. $26,741 89 |