Word: mutuality
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Dates: during 1930-1939
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...spite of its name, Pacific Mutual was actually mutual (that is, wholly owned by its policyholders) in only one division. In this mutual division, insurance examiners fortnight ago found a surplus of $4,792,000. But the nonparticipating end of the business showed a whopping deficit of $22,350,000. Main reason for the deficiency was that the personal accident & health department had been losing money for years, was more than $23,000,000 in the red. Main reasons for the accident department's showing were low premiums and high monthly benefits in its noncancelable disability policies, under which...
Apparent object of the Kemp-Carpenter reorganization plan was to get Pacific Mutual out from under its disability obligations. All other types of policies were immediately reinsured by the new company at the original rates, but the holders of noncancelable disability policies were told they had only two alternatives: 1) to file a claim with the California Insurance Commissioner or 2) to reinsure their policies in the new company at the original rates and accept benefit reductions ranging up to 80%. However claims now being paid under these policies would not be affected by the change...
...noncancelable policyholders and a group of stockholders rushed into the court of Superior Judge Henry M. Willis, to whom the case had been transferred. Making no secret of their suspicions, policyholders charged that, as late as the first of this year, false financial statements had been issued showing Pacific Mutual $10,000,000 in the black when there was actually a deficit of more than twice that amount, that Amadeo Peter Giannini's Occidental Life Insurance Co. had offered to buy the company for $10,000,000, and keep all policies in force, although Commissioner Carpenter had valued...
Most ominous accusation came from Senator William Gibbs McAdoo's law partner, Colonel William Haynie Neblett, a policyholder. He charged that directors of old Pacific Mutual had dictated Governor Frank Finley Merriam's appointment of Commissioner Carpenter for the specific purpose of handling the reorganization, that the reorganization was part of a conspiracy by officers of old Pacific Mutual now in the new company to get control of Pacific Mutual assets...
Commissioner Carpenter, however, made a good impression on impartial observers when he issued findings made in collaboration with insurance examiners from six States whose citizens are heavily involved in Pacific Mutual. Said the report: ''While the difficulties in which the company finds itself are due principally to inadequate rates on noncancelable accident and health policies, a considerable portion could have been alleviated by the executive officers of the company by following the advice of the company actuaries as early...