APPENDIX I

"§ 18. If any domestic insurance corporation shall have invested any of its funds in or loaned any of its funds upon the stock, bonds or other evidences of debt of other corporations or of any nation, State, county, city, town, village, school district, municipality or other civil division of any state, pursuant to the laws of this state, and the superintendent shall have reason to believe that such stock, bonds or other evidences of debt are not amply secured or are not yielding an income, he may direct it to report to him under oath the amount thereof, the security therefor and its market value. No stock and no bonds or other evidence of debt if in default as to principal or interest, or if not amply secured, shall be valued as an asset of the corporation above its market value. All bonds or other evidences of debt shall, if amply secured and if not in default as to principal or interest, be valued as follows: if purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield meantime the effective rate of interest at which the purchase was made; provided that the purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, and provided further that the superintendent of insurance shall have full discretion in determining the method of calculating values according to the foregoing rule, and the values found by him in accordance with such method shall be final and binding; provided, also, that any such corporation may return such bonds or other evidences of debt at their market value or their book value, but in no event at an aggregate value exceeding the aggregate of the values calculated according to the foregoing rule."

APPENDIX J

*"There shall also be charged as a liability to each company which undertakes or writes insurance under subdivision three of section seventy of this act, whether organized under this or any other state or country, a further reserve as hereinafter provided. For the purpose of computing said reserve, each such company which has been engaged in liability underwriting for ten years or more, shall, on or before the first day of October in each year, state in writing to the superintendent of insurance its experience in the United States, under all forms of liability policies, each year separately according to the calendar years in which the policies were written, during a period of five years commencing ten years previous to the thirty-first day of December of the year in which the statement is made, in the following particulars, namely: the number of persons reported injured under all the forms of liability policies, whether such injuries were reported to the home office of the given company or to any of its representatives; the amount of all payments made on account or in consequence of injuries reported under such policies; the number and amount, separately, of all suits or actions against policyholders under such policies which have been settled, either by payment or compromise; both of the above amounts to be ascertained as of date of the thirty-first day of August of the year in which the statement is made, and to include in the case of suits all payments made on account or in consequence of the injury from which the suit arose,

*Part of $86.

whether prior to or later than the date at which the suit was brought. Each such company shall thereupon reserve upon all said kind of policies, irrespective of the date at which the policies were issued (1) for each suit or action pending, on injuries reported prior to eighteen months previous to the date of making the statement, whether such injuries were reported to the home office of the given company or to any of its representatives, and which is being defended for or on account of the holder of any such policy, and the average cost thereof as shown by said experience, and (2) for injuries reported under such policies at any time within eighteen months, whether such injuries were reported to the home office of the given company or to any of its representatives, the average cost for each injured person as shown by said experience. From the sum so ascertained the company may deduct the amount of all payments made on account or in consequence of said injuries reported within eighteen months, this amount to be taken as of the date at which the statement is made. Any company which now issues or shall hereafter issue, liability policies as aforesaid, and which has not been engaged in liability underwriting for ten years, shall nevertheless, until such times as it may be able to state its experience of the period herein before required, make and maintain a reserve upon all said kind of policies, irrespective of the date at which the policies were issued, determined as follows: (1) for each suit or action pending, on injuries reported prior to eighteen months previous to the date of making the statement, whether such injuries were reported to the home office of the given

company or to any of its representatives, and which is being defended for or on account of the holder of any such policy, the average cost thereof as shown by the average of said experience of all other companies stated as required by this section, and (2) for injuries reported under such policies at any time within eighteen months, whether such injuries were reported to the home office of the given company or to any of its representatives, the average cost for each injured person as shown by the average of said experience of all other companies stated as required by this section: which average costs for suits and for injured persons shall be furnished by the superintendent of insurance to each such company on or before the first day of December, in each year. From the sum so ascertained each such company may deduct the amount of all payments made on account or in consequence of said injuries reported within eighteen months, this amount to be taken as of the date at which the statement is made."

APPENDIX K

(426) § 512. Sec. 3.

"The commissioner of insurance shall compute the reserve fund to be held by such companies or associations by taking fifty percentum of the premiums received upon all risks not expired at the time of making such computation. And in addition thereto in the case of corporations doing an employers' liability insurance, the commissioner of insurance shall compute the liabilities for unsettled claims in said employers' liability insurance business at not less than fifty per cent of the premiums received and earned during each and every year less the amount paid for losses and expenses incidental thereto, upon claims brought under policies issued during said year: Provided, That such reserve shall not be computed for more than the five years previous to the time of making such computation: Provided further, That to the amount of the reserve so ascertained, there shall be added such amount as is necessary to provide for claims of earlier date, not liquidated."