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VOTERS OF GEORGIA, RE AD AND RER EA D
AN ADDRESS TO THE TEXAS WELFARE COMMISSION
Houston, Texas, April 16th, 1912.
To the Texas Welfare Commisson.
In response to your request for information concerning the
operation of the Robertson insurance law, we respectfully submit
the following in answer to your inquiries, taking them up in the
order named:
First---Why did various outside life insurance com
panies withdraw from Texas rather than submit to pro
visions of that law?
Second--What are objectionable features from their
standpoint?
In answer to these questions we submit the following quota
tions :
“The Robertson aet became effective July 12, 1907. and pm
vuies that every life insurance company ‘shall as a condition ot
its right to do business in this state invest and keep invested in
1 exas securities a sum of money equal to at least 75 per cent of
the aggregate amount of the legal reserve set apart and appor
tioned Io policies of life insurance written on the lives of citizens
of this state.’
“Rather than comply with the provisions of this law the
following companies have withdrawn from the state:
Columbia National, Boston. Mass.
Des Moines Life, Des Moines. lowa.
Equitable Life, New York. N. Y.
Fidelity Mutual. Philadelphia. Pa.
Germania Life. New York. N. Y.
Home Life, New York, N. Y.
Manhattan Life. New York. N. Y.
Massachusetts Mutual, Springfield. Mass.
Mutual Benefit Life. Newark, N. J.
Mutal Life of New York, N. Y.
National Life. Montpelier, Vt.
New York Life, New York. N. Y.
Northwestern .Mutual, Milwaukee, Wis.
Penn Mutual. Philadelphia. Pa.
Prudential, Newark. N. J.
Reliance Life, Pittsburg. Pa.
Security Mutual. Bingham, N. Y.
Travelers' Insurance Company. Hartford, Conn.
Union Mutual, Portland. Maine.
Washington Life, New York, N. Y.
Wisconsin Life, Madison, Wis.
“As far back as the records of this department extend, it is
shown that some of these companies were doing business in Texas
in 1880. Others were admitted from time to time down to 1904,
when the last one was granted a permit to enter this field. The ag
gregate amount which these outgoing companies have collected from
the people of Texas in premiums from the time that they entered \
until their recent withdrawal, is $68,662,913.42. And the aggregate
amount that has been paid back in losses by these companies is
$22,449,408.89- a difference of $46,213,504.53.” —Extract from the
official report of Hon. R. T. Milner, commissioner of agriculture, in
surance. statistics and history, to the governor. August 31, 1907.
“The bill, as originally drawn, required the deposit within the
state, of the securities in which the companies were required to in
vest their reserves. Upon the suggestion being made that this de
posit requirement would work a sacrifice of the policy holder;’ in
terest because of the heavy additional ad valorem tax burden, which.,
under the constiution and laws of the state such deposit would en
tail. th’e bill was amended so as to provide that the commissioner
of insurance and banking should have the power to waive any re
quirement of the law upon a showing that the enforcement of such
requirement would work a sacrifice of the policy holders’ interest.
With this amendment the bill was passed by the legislature, received
executive approval and became the law. Immediately,2l of the
larger companies, which had for years transacted a majority of the
!if< insurance business of the state, announced their purpose to
withdraw from the state, and did discontinue writing new business
shortly prior to the date when the law became effective, the most
of them announcing in published statements and in circular letters
addressed to their policy holders that they* were forced to take this
action bv reason of the enormous tax burden which would be im
posed upon them, ami through them upon their policy holders by
compliance with the deposit requirement, making no mention of.
or referent.' to.-the provision of the law I hat this, or any other of
its requirements might be waived upon a showing that its enforce
men! would sacrifice the policy holders interest. More than 25 com
panies remained in the stale and have continued to transact busi
ness. A number of large companies having heavy Texas reserves
applied for a waiver of the deposit requirement, showing, upon the
hearing of their application, that compliance with that requirement
would subject them to excessive taxation, and in all such cases this
requirement was waived. Many companies, having small I exas
reserves, could and did comply with the deposit requirement with
out the additional tax being burdensome. When the commissioner
of insurance and banking waived the deposit requirement as to the
companies applying for such action, the officers of companies which
had withdrawn from the state immediately announced that thev
could not return, notwithstanding this action, for the reason that
the policy of the state insurance department upon this question
might be changed at any time by a change in the incumbency of the
office of commissioner, ami that they could not afford to risk the
uncertainty as to whether there would continually be in office a com
missioner who woidd waive the deposit requirement. In his an
nual report for 1908. the commissioner of insurance and banking
recommended that the deposit requirement should be repealed by
the legislature of 1909, and the author of the law. who had been re
elected to the legislature, publicly announced his purpose to intro
duce a bill effecting that amendment of the law, and this was rec
ommended bv Governor Campbell in his message to the legislature.
Thus, the issue was definitely and permanently narrowed to the
question whether life insurance companies collecting life insurance
premiums from citizens of the state, to be invested somewhere, and
wherever they might be so invested in safe securities which would
bring the best rate of interest obtainable, and which the companies
admitted could be invested as advantageously within the state of
Texas as elsewhere, should be required to invest a fair proportion of
the reserves so collected from Texas citizens in I exas securities.
Immediately upon it becoming apparent that the deposit require
ment would be entirely repealed, the Association of Life Insurance
Presidents, representing the companies which had withdrawn from
the state, in convention in the city of New York, adopted a resolu
tion. in which they ‘respectfully urged all companies which retired
from Texas on the enactment of the law to unite in demanding the
repeal of the compulsory investment feature. I his ‘demand.’
made by the representatives of foreign corporations, upon the legis
lature of a state, within whose borders they desired the privilege
of transacting business, was not acceded to, but was met by the
Texas legislature which convened in January of this year, passing,
by overwhelming vole of both house®, a bill, again introduced by
THE ATLANTA GEORGIAN AYD NEWS. SATURDAY. JULY 27. 1912.
Judge Robertson, repealing the deposit requirement and re-enacting
the law as thus amended, making the sole and unconditional ye
quireemnt that life insurance companies shall invest and keep in
vested in Texas securities 75 per centum of their Texas reserve.
“Os the 21 companies which withdrew from the state when
the law* became effective, two have returned. The withdrawal of
these companies, which for years had written a major portion of
the life insurance business of’the state, caused the total of new’ life
insurance written in the state for 1908 to fall to $48,000,000. as
against $64,000,000 in 1906; but, nothwithstanding this tact, there
has been already a notable increase in the life insurance investments
made within the state and an especial increase in the volume of such
investments in real estate mortgages. ’Hie 21 companies which
withdrew from the state w’hen the law’ became effective, according
to their sworn statements, had invested at the end of 1906 in Texas
real estate mortgages, all told, less than $1,000,000. while the com
panies transacting business in the state during 1908 invested under
the operation of the law’ during that year in Texas real estate mort
gages more than $2,000,000, and it is safe to say that during 1908
the investments in Texas securities of all forms by life insurance
companies were much larger than during any previous year in the
history of the state, and under the mathematical law of increasing
reserves these investments are certain to increase largely in volume
year after year. It is also apparent that the overwhelming majority
of the people of the state are entirely satisfied with the situation as
to the life insurance facilities now’ afforded them. There are today
45 life insurance companies transacting business in the state, pos
sessing assets amounting to approximately $250,000,000, many of
them being strong, clean, young companies organized under the
law’s of Texas and other states of the South and West; but. there
are also a number of older and larger companies continuing to
transact business in full compliance with the law, the four largest,
possessing assets amounting to $16,000,000. $20,000,000. $68,-
000,000 and $92,000,000. respectively. There has been no complaint
that any citizen of Texas has been unable to obtain all the life in
surance desired and of the kind desired since the law became
effective.
“It has never been contended by the opponents of this legisla
tion that life insurance companies could not invest the required pro
portion of their Texas reserves in Texas securities, both safely and
profitably. On the contrary, the representatives of the companies
which quit the state when the law' became effective have avowed
that but for the passage of the law they would have made Texas
investments largely in excess of those which it required, and that
they stand ready whenever it is repealed to return to the state for
the transaction of life insurance business, and to make investments
in Texas securities even in excess of those w’hich the law requires,
and representatives of these companies have repeatedly suggested
the enactment, in substitution for the present law, of one imposing
a heavy penal tax upon the gross premium receipts of companies
failing to make the required investments. There is thus presented
the phenomenon of these great life insurance companies bitterly
opposing and resenting their being required by the laws of the stale
of Texas to do that which they say they w*ould cheerfully do, but
for the fact that it is required by law. The injustice and the im
position of requiring a corporation or an individual to do that which
it avows its readiness to do but for the requirement, must be largely
sentimental and psychological. The gist of all the arguments which
have been presented against such legislation is that the managers of
life insurance companies, being the administrators of great trust
funds, cannot properly submit to any compulsory laws controlling
their investments and that a proper sense of their responsibility to
their policy holders will not permit them to delegate, even to the
legislature of a sovereign state, their freedom to exercise their own
judgment in the investment of the reserves belonging to citizens of
that state; that life insurance investments should be controlled
alone by natural laws as interpreted and applied by a company’s
directors; and that compulsory investment legislation is an unwise
and unwarranted innovation.’’ —Extract from address of the Hon.
Thos. B. Love, commissioner of insurance and banking, before the
Trans-Mississippi Commercial Congress at Denver, Colo., delivered
August 18, 1909.
•
Third --To what extent have life insurance com
panies been organized in Texas since passage of that law?
There were five Texas life insurance companies, w’ith total as
sets aggregating $974,276.38, and with a total outstanding insurance
of $18,030,730, transacting business in the state when the Robertson
bill became a law. On December 31, 1911, there were 19 Texas life
insurance companies transacting business in this stale, with com
bined assets of approximately $10,500,000, and outstanding insure
anee aggregating more than $116,000,000.
Fourth-- Is there any difference between the attitude
of Texas companies and outside companies under Texas
laws---if so, wbat?
We understand that this question was framed with the idea of
developing whether the Robertson law affects the business of Texas
companies and outside companies alike. The Robertson law affects
the business of Texas companies and outside companies in exatcly
the same way except in the matter of taxation. The basis for taxing
home companies is fixed by the following statute:
“Insurance companies incorporated under the law’s of this state
shall hereafter be required to render for state, county and municipal
taxation all of their real estate as other real estate is rendered,
and all of the personal property of such insurance companies shall
be valued as other property is valued for assessment in this state in
the following manner: From the total valuation of its assets shall he
deducted the reserve, being the amount of the debts of insurance
companies by reason of their outstanding policies in gross, and from
the cemainder shall be deducted ftie assessed value of all real estate
owned by the company and the remainder shall be the assssed tax
able value of its personal property. Home insurance companies
shall not be require to pay any occupation or gross receipt tax.’’
(Acts Thirty-first Legislature, chapter 108, section 25.)
Texas companies are now paying taxes al the rate of approxi
mately $85,000 per annum.
On all premiums collected in other states, Texas companies are
taxed at various rates up to 2 1-2 per cent.
The bases fortaxing outside companies is fixed by the following
stat ute;
“Each life insurance company not organized under the laws of
this state, transacting business in this state, shall on or before the
Ist day of March, 1910, and annually thereafter, make a report to
the commissioner of insurance and hanking of this state, w’hich re
port shall be sworn to by either the president or vice president and
secretary or treasurer of such company, and which shall show the
gross amount of premiums collected during the year ending on De
cember 31 preceding from citizens of this state upon policies of in
surance; and each such company shall pay annually an occupation
tax equal to 3 per cent of such gross premium receipts; provided,
that w’hen the report of the investment in Texas securities, as de
fined by law. of any such companies as of December 31 of any year,
shall show that it has invested on said date as much as 30 per cent,
of its total Texas reserves, as defined by law, in promissory notes
or other obligations secured by mortgage, deed of trust or other
lien on Texas real estate, the rate of occupation tax shall be reduced
to 2.6 per cent, and when such report shall show that such company
has so invested on said dates as much as 60 per cent of its total
Texas reserve, the rate of sucJi occupation tax shall be reduced to
2.3 per cent, and when such a report shall show that such company
has so invested, on said date, as much as 75 per cent of its total
Texas reserve, the rate of such occupation tax shall be reduced to 2
per cent; provided, that all such companies shall in any event make
the investments in Texas securities in proportion to the amount of
Texas reserves as required by law. Such occupation taxes shall be
for and on account of the business transacted within this state dup
ing the calendar year in which such premiums were collected or for
that portion thereof during w’hich the company shall have transact
ed business in this state while this aet was in force and effect.”
(Acts TWrty-first Legislature, First Called Session, chapter 3, sec
tion 1,)
This act reduced taxation against outside companies because
prior thereto they had been paying 2 14 per cent.
During 1911 Texas companies collected about $3,500,000 pre
miums, and are paying taxes as above shown of approximately $85,-
000 per annum. On same amount of premium income outside com
panies would have been required to pay $70,000 taxes on the 2 per
cent basis.
Fifth---Statistics concerning aggregate capitalization
and resources of Texas companies.
The aggregate resources of the 19 Texas companies on Decem
ber 31st, 1911, was approximately $10,500,000,
Sixth—Satisfies concerning amount of business tn
Texas now carried on by outside companies and by
Texas companies.
The amount of business now carried by outside companies nsA
now doing business in Texas is not available, because the companies
that withdrew’ have made no report of such business since 1907. The
amount of insurance in force with these companies on December
31st, 1906, this bping the date of the last annual statement before the
withdrawal of the 21 companies named, was $262,818,590.80. The
premiums collected during 1906 on this business amounted to $8,648,-
885.78, The insurance in force with outside companies now doing
business in Texas, and who consequently make reports, was on De
cember 31st, 1911, $104,841,200.88, as shown by following certificate
from the commissioner:
AMOUNT OF INSURANCE IN FOROE ON TEXAS LIVES DE
OEMBER 31, 1911, IN OUT-OF-STATE LIFE COM
PANIES (LEGAL RESERVE).
Company. s Amount of Insurance.
Aetna, Hartford, Conns 7,169,999 13
(a) American Central, Indiapanolis, Ind 2,657,264 42
American National, Lynchburg, Va 610,600.00
Bankers’ Reserve, Omaha, Neb 1,114,000.00
(b) Bankers’ Life, Des Moines, 10wa... 14,660,600.00
Capitol Life, Denver, Colo 1,236,408.00
Central Life Assurance Society, Des Moines, lowa . 174,200.00
(c) Colorado National, Denver, Colo
Continental Assurance, Chicago 2,000.00
Federal Life, Chicago, Di 313,173.00
(a) Franklin Life, Springfield, 11l 4,781,467.00
Great Western Life, Kansas City, Mo 3,129,720.00
Hartford Life, Hartford, Conn 4,801,200.00
Home Life, Oklahoma City, Okla 270,000.00
(a) International, St. Louis, Mo 632,470.00
Kansas City Life, Kansas Oity, Mo 10,424,902.78
(c) Louisiana National, New Orleans, La
Manhattan Life, New York, N. Y 7,058,479.00
Meridian Life, Indianapolis, Ind 1,619,337.00
Missouri State, St. Louis, Mo 4,500,985.00
(a) National Life of U, 8. A., Chicago, 11l 3,092,067.80
(a) Northwestern National, Minneapolis, Minn 1,648,886.00
Occidental, Albuquerpe, N. M 676,080.00
Oklahoma National, Oklahoma City, 0k1a...- 106,500.00
(a) Pacific Mutual, Los Angeles, Cal- 8,028,968 00
Pittsburg Life and Trust, Pittsburg, Pa- 5,786,288.00
(a) Protective Life, Birmingham, Ala 619,500.410
Prussian, Berlin, Germany (re-insurance) 1,210,118.40
Reliance, Pittsburg, Pa 1,574,090.00
Reserve Loan, Indianapolis, Ind 1,186,250.00
Security, Richmond, Va H 994,396.00
(c) Southern National, Louisville, Ky .
(a) State Life, Indianapolis, Ind
Union Central, Cincinnati, Ohio 8,942,726.00
U. S. Annuity and Life, Chicago, 11l 176,020.25
Volunteer State Life, Chattanooga, Tenn 1,597,381.00
$104,841,200.90
(a) Including all business written during 1911.
(b) Including assessment insurance in force before company
changed to legal reserve.
(c) Figures not available.
T hereby certify to the foregoing as a correct list of the amounts
of insurance in forec on Texas lives, December 31st, 1911, in out-of
state life companies (legal reserve), as these amounts are shown in
the annual statements submitted to me by these companies.
Given under my hand and seal of office this 23d day of April,
A. D. 1912.
(Sea 1)
Commissioner*
Os course to this amount should be added the business remaining
in force wHh the companies that withdrew from the state in 1907.
This can only be estimated, as they make no reports to the depart
ment. They have written no new business since they withdrew, ami
after making due allowance for terminations we believe that they
still have sufficient business here to justify us in stating that the
total amount of business in force by outside companies at. this time
is approximately $300,000,000.
Seventh—Statistics concerning investments in Texas
securities by outside companies and Texas companies.
At the time of the passage of the Robertson law, the 21 com
panies that withdrew had loans in Texas aggregating $906,732 and
bonds amounting to $14,028,116, principally old first mortgage bonds
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