496   BEST'S INSURANCE REPORTS   FIRE AND MARINE.

AMERICAN 'MUTUAL INSURANCE COMP VN Y,
Indianapolis, Ind.

ADMITTED ASSETS, DECEMBER 31, 1919.

Bonds and stocks owned (market value)    $26, 588 50

Interest due and accrued thereon   1S7 36

Cash in banks and office    17,635 71

Agents' balances not over three months due   34.202 33
Net equity in leasehold and improvements

thereon   162,595 92

Other admitted assets    30 67

TOTAL ADMITTED ASSETS    $241, 260 49

GENERAL REVIEW.

This company was incorporated December 31, 1915, under the Mutual Act of Indiana. approved March 9, 1915, and began business September 29, 1916. It is licensed in the States of Illinois, Indiana and Ohio. Besides doing a general fire and tornado business it maintains a special department for the writing of automobile insurance covering fire and theft. It also writes marine insurance.

The company was organized by its secretary, John W. McGinety, who states that he has had considerable insurance experience, representing stock companies in various capacities in Indiana, Kentucky and West Virginia. Mr. McGinety- advised us that the company was organized without any promotion fees or expenses, and that the officers and directors all serve without compensation, with the exception of the secretary and vice-president. who devote their whole time to the business. Mr. McGinety is also connected with the International Lloyds of Indianapolis, from which this company accepts reinsurance.

The company operates on the cash premium plan. It states that it charges usually the regular tariff rates and pays dividends to policyholders at the end of the policy year. based on the experience of the company.

The company advised us that its policies are of the standard New York form with a mutual clause providing for a contingent liability of not more than the premium specified in the policy.

Policies may be written for from one to five years, ac-cording to the class of risk and requirements of the assured.

The company has issued guarantee fund certificates which were purchased, the company states. by the officers and directors without rebate or commission. The certificates provide for 7 is interest, but under the law are not a liability of the company and can be repaid or redeemed only out of the surplus earnings of the company.

Concerning the very large item in the schedule of assets designated "Net equity in leasehold." the company says:

In explanation of the item above set out, your attention is directed to the following statement of facts:

" Under date of November 30, 1918. the American Mutual Insurance Company, by virtue of a contract of sale, approved by the Insurance Department of the Auditor of State's office of the State of Indiana, became the owners of a modern fifteen-story, fire proof office building, known as the Lemcke Annex through the acquisition of the entire common stock issue of the R. A. Lemcke Realty Company.

"Prior to the acquisition of said property, the American Mutual Insurance Company caused same to be appraised by the State Insurance Department of Indiana. Said ap-

praisement as filed in this office fixes the value of said property at $701,311. The leasehold equity is arrived at as follows:

"Book value (real estate), $600,000; preferred stock issue, $335,000; bills payable (evidenced by notes), $116,-907.46, and equity in leasehold and improvements, $14S,-002.54.

"It will be noted that for the basis of making our report this property is carried at $101,311 less than the official appraisement by the Insurance Department of the State of Indiana.

" The income from rentals of the building is approximately $100,000 per year, and the American Mutual Insurane - Company, by virtue of said purchase, is credited with the acquisition of a most desirable Home Office building."

In the above statement, the equity in the leasehold is carried at an advance of about $14,000 over the 1918 figure. Concerning the guaranty fund. it says:

"By reason of the acquisition of the property above re-tensed to, the Anu'riesn Mutual Insurance Company in-creased its guaranty fund from $14,000 to $166,401). which action we are permitted to take under the laws governing the operation of mutual companies in the State of Indiana We might add in this connection that the .guaranty fund so established is not a liability against the company, but is evidenced by guaranty fund certificates, which are payable out of the surplus earnings of the company with interest not exceeding 7 e:c annually. The total annual interest on the guaranty fund issue amounts to $2,998, which is an average of 1.8% covering the interest charge thereon."

The investment of the major part of the company's re->ourees in a single item, particularly of this character, is open to criticism.

Territory.— It operates in El.. Ind.. O. and Pa.

Officers.— President, Dr. So1lis Runnels, physician and surgeon: vice-president, F. II. Irwin, insurance: second vice-president. J. P. Cook, vice-president National Concrete Co.; secretary, J. W. McGinety, insurance: treasurer. Geo. W. Snyder, secretary Security Trust Co.

Directors.— The above officers and B. D. Brooks, president United Ice Co., and J. J. Peters. insurance

Iiremne, 1919.— Gross premiums written, $178,247.41; less reinsurance. $16,091 49: less return premiums, $30,-S67.18: total net premiums written. $131,288.74; interest and rents. $1,673.64; other income, $814.69; total income, $133,777.07.

Disbursements, 1919.—Net losses paid, $44,352.05; underwriting expenses. $41.733: dividends to policyholders,