STATE OF NEW YORK

INSURANCE DEPARTMENT

NEW YORK OFFICE, 165 BROADWAY

NEW YORK, April 15, 1910

Hon. WILLIAM H. HOTCHKISS, Superintendent of Insurance, Albany, N. Y.

Sir.- In accordance with your directions contained in appointment No. 2306, hereto annexed, dated December 13, 1909, I have made an examination of the Glens Falls Insurance Company, which examination comprised an investigation at the home office at Glens Falls, N. Y., and at the office of the company's western department at Chicago, Ill. The examination was made for the purpose of verifying the annual statement filed with the Insurance Department for the year ending December 31, 1909.

A statement showing the income and disbursements for the year 1909 and the assets and liabilities as of December 31, 1909, is herewith respectfully submitted.

Market value of bonds and stock over book value.

Market value of real estate over book value....

150 00

$27, 729 23

87,745 93

25,000 00

Explanation of Differences in Annual Statement

All items of assets and liabilities as set forth in the company's annual statement to the department December 31, 1909, have been carefully checked, and result in an increase of the surplus from $2,434,925.79 to $2,525,206.09. Said total increase is partly accounted for by the fact that the market rates used by the depart

ment are, in most cases, higher than those used by the company, with the result that the total market value over book value of its bonds and stocks was increased from $21,558.93 as reported in the annual statement to $87,745.93 or an increase of $66,187. In determining the value of the company's bonds, market values were used instead of amortized values in accordance with section 18 of the Insurance Law, the market values being lower than the amortized values. The balance of the increase in surplus is practically accounted for by the difference in the valuation of the real estate owned, which was carried by the company at the book value, or $25,000 less than the value set forth in the report, as explained below under the heading of "Real Estate."

The company's statement for the year 1909 as filed with the Insurance Department was found to be approximately correct but the few corrections necessary in its list of assets are accounted for in the following manner, viz.: Cash in bank has been reduced in the sum of $105.29. Of this amount $100 is reported separately under the head of "Deposit with the Philadelphia Underwriters Association." The balance of $5.29 represents the difference in the company's credit in two banks and that called for by the books. This small difference could not be explained by the officers, having existed for some time, and therefore it was necessary in this examination to charge off said amount to profit and loss. It, therefore, appears in the list of disbursements above set forth. In the list of non-ledger assets, interest due and accrued, the amount $27,729.23, as reported in this examination, is in excess of that reported by the company to the amount of $276.64. This increase is owing to the fact that the company in computing its interest due and accrued did not take full credit for all moneys due.

In the list of assets not admitted, the company deducted from its gross assets the sum of $9,190.21 for uncollected premiums more than three months overdue but, as a result of a careful examination of the company's uncollected premium account, both at the home office at Glens Falls, N. Y., and the office of the Western Department, Chicago, Ill., it was found that, through errors and omissions, the company should have deducted the sum of $10,665.45.

Following are the corrections in the company's list of liabilities as a result of this examination. The unpaid losses were found to be $68.38 less than the company reported in its annual statement to the department. However, at the date of this examination it was found that a number of these losses had been adjusted for amounts less than as reported, the company receiving credit for the difference. On the other hand, there were several losses not included in its statement to the department, notice of the same not having been received by the company until January, 1910. There was also found to be a further credit due for reinsurance on said losses, all of which resulted in the difference of $68.38, as stated above.

In the list of liabilities, the amount due and accrued for State taxes, as reported by the company in its annual statement, has been increased by this examination from $27,500 to $30,000. By applying the same ratio of taxes paid on 1908 premiums to the premium income of 1909, the result is approximately $30,000, as above reported.

There is a further liability of $3,500 which was not set forth in the company's annual statement, but was reported by said company to the Internal Revenue Bureau at Washington, D. C. In accordance with the Federal Corporation Tax Law this amount represents a tax of 1 per cent. on the net income of the company for the year 1909.

From an examination of the company's books at the Chicago office there was found an additional liability of $1,589.28 for sundry bills due and unpaid. This amount was not reported by the company in its annual statement, but has been included in this report.

There is included in the company's list of liabilities the sum of $20,000, representing an estimate by the company of the contingent profit due agents. By an examination of the books, it was found that during the month of January, 1910, the sum of $12,181.91 was paid on this account, said amount representing the payment in full. Therefore, only said sum of $12,181.91 was charged in the report of this examination.